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Progressive  Business 
Accounting 


An  Elementary  Course  in  Bookkeeping,  Busi- 
ness Practice,  Forms  and  Usages  for  Com- 
mercial    Schools     and     Individual     Reference 


Prepared  and  Illustrated  by 

LLOYD  E.  GOODYEAR 

Author  of  Goodyear's  Baak  Accounliog 

Joint  Author  of  Goodyear's  Higher  Accountiag 


THE  WATERLOO  SYSTEMS  CO. 
Waterloo,  Iowa 


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Ckjpyritrhted  Ity 

LLOYD  E.  GOODYEAR 

1910 


eOUCATlON  DEPT, 


PREFACE 


In  our  judgment,  the  call  for  new  work  in  elementary  bookkeeping 
refers  to  a  course  arranged  in  direct  illustrative  lines.  Bookkeeping  is  an 
applijcation  of  arithmetic.  It  would  be  useless  to  attempt  to  discover  any- 
thing in  the  principles  of  single  or  double  entry  bookkeeping  that  is  not  well 
established.  It  would  be  equally  useless  to  carry  a  student  through  the  forms 
of  such  discovery.  The  land-marks  of  accounting  have  been  definitely  placed, 
the  principles  have  been  clearly  defined.  It  is  the  part  of  a  course  of  this 
nature  to  so  arrange  the  facts  that  in  a  progressive  order  each  may  follow 
as  a  result  of  that  which  has  preceded. 

This  course  consists  of  twenty-five  graded  exercises  beginning  with 
the  ledger  form,  from  that  passing  to  its  use,  from  that  to  the  rules  governing 
its  use,  and  to  the  other  forms  contributing  to  it.  The  trial  balance,  state- 
ment, and  ledger  closed  are  the  natural  and  necessary  sequt-nces  of  the  line 
of  demonstration  commenced.  The  subject  matter  of  these  exercises  has 
always  been  chosen  with  reference  to  the  previous  experiences  of  those 
taking  the  course. 

Following  exercises  ten.  fifteen  and  twenty  are  business  practice  sets 
A,  B  and  C.  These  subject  the  knowledge  acquired  in  the  exercises  to  a  fair 
business  test.  The  introduction  of  transactions  and  forms,  outgoing  and 
incoming,  used  in  A,  B  and  C,  gives  to  the  accounting  principles  and  facts 
learned  a  business  setting. 

It  is  claimed  for  results  in  the  course  as  here  arranged  that  the  student 
has  a  more  definite  knowledge  of  what  to  do.  and  a  clearer  perception  of 
completion  when  his  task  is  finished,  than  in  other  similar  courses  now  in 
use.  Likewise,  the  teacher  has  the  maximum  control  of  the  students'  work 
with  the  minimum  effort  on  his  part.  The  slow  student  cannot  seem  to  be 
rapid,  nor  can  the  progress  of  the  rapid  student  be  covered  if  the  work  is 
taken  as  outlined,  and  the  accompanying  automatic  check  is  used.  This  is 
a  consideration  of  importance  where  one  teacher  has  charge  of  a  large  depart- 
ment. A  teacher  does  not  want  to  do  any  work  that  a  prepared  system  can 
do.    He  wants  to  teach,  not  tinker. 

The  established  principles  and  bookkeeping  rules  are  arranged  in  num- 
bered information  topics,  to  which  reference  is  constantly  made.  The  forms 
are  reproductions  of  the  work  of  a  practical  writer  and  accountant  who 
neyer  hesitated  to  allow  his  work  to  undergo  the  test  of  the  first-class  busi- 
ness office  in  first-class  competition.  The  variety  of  forms  will  be  found 
extensive. 

Exercises  I.  to  X.,  inclusive,  provide  a  four  Aveeks'  course  for  those  who 
do  not  intend  to  pursue  the  subject  further. 

It  will  take  the  average  commercial  worker  six  months'  time  to  complete 
the  entire  course. 


5415^49 


CONTENTS 


Exercise        I.     Ruling  the  Ledger. 

II.     Debits  and  Credits.     Tlie  Cash  Account. 

III.  Double  Entry.    Xicdger  of  Four  Accounts. 

IV.  Account  Titles.     Nature  and  Division. 

V.  Ruling  the  Journal. 

VI.  Journalizing.     Posting.     Trial   Balance. 

VII.  A  Journal-Ledger   Group.     Opened,   Continued,   Closed. 
VIII.     A   Journal-Ledger   Group.     Opened,    Continued,   Closed. 

IX.  A   Journal-Ledger   Group.     Opened,   Continued,   Closed. 

X.  A  Journal,  Cash,  Purchase,  Sales,  Ledger  Group.     Opened,  Continued, 
Closed. 

Set  A.     Business  Practice.     Sole  Proprietor.     100  Transactions. 
Exercise     XL     Statements  of  Business. 

XII.     Drills  in  Miscellaneous  Journal  Entries. 

XIII.  Drills  in  Miscellaneous  Journal  Entries. 

XIV.  Drills  in  Partnership  Opening  Entries. 

XV.     Journal,  Cash,  Purchase,  Sales,  Ledger  Group.     Pai-tnership. 
Set  B.     Business  Practice,  Partnership.     100  Transactions. 
Exercise    XVI.     Partnership  Statements. 

XVII.  Drills  in  Miscellaneous  Journal  Entries. 

XVIII.  Ruling   Special   Column   Books. 

XIX.     Special  Column  Group.     Opened,  Continued,  Closed. 
XX.     Corporation  and  Joint  Stock  Features. 
Set  C.     Business  Practice,  Corporation.     100  Transactions. 
Exercise   XXI.     Single  Entry. 

XXII.     Six-Column  Journal. 
XXIII.     Departments  and  Divisions. 
XXIV.     Outlining  Books. 
XXV.     The  Bookkeeper's  Day's  Work. 


Introduction 

The  principles  of  accountancy  should  be  understood  by  every  person 
who  aspires  to  economic  independence.  The  art  of  bookkeeping  is  one 
thing;  the  science  of  accounts  is  another.  The  former  is  in  the  nature  of 
a  trade  which  a  person  may  follow  profitably  and  which,  from  its  close 
relation  to  business  affairs,  may  lead  to  commercial  opportunities.  The  latter 
is  the  measure  by  which  the  business  man  from  time  to  time  examines  the 
progress  of  the  parts  of  his  business  and  determines  its  course.  By  the 
accounts  kept,  the  business  man  should  know  which  of  his  investments  of 
money  or  effort  are  profitable  and  which  are  unprofitable,  what  his  property 
consists  of  and  what  his  debts  are.  Knowing  these  facts,  he  can  discontinue 
those  investments  showing  losses  or  small  gains,  and  invest  more  largely  in 
those  showing  comparatively  greater  profits. 

In  the  earlier  history  of  our  country,  business  was  quite  simple  and  the 
profits  of  all  undertakings  were  large,  so  that  one  could  often  accumulate 
much  wealth  without  any  regard  to  bookkeeping.  Conditions  have  since 
changed.  "With  the  growing  density  of  population,  profits  in  all  departments 
of  trade  have  become  smaller  and  more  intelligence  in  business  affairs  has 
become  necessary.  Now,  the  successful  man  can  no  longer  profitably  carry 
his  business  in  his  head,  but  must  carry  the  facts  of  his  business  in  his  books, 
leaving  his  mind  free  to  give  its  entire  power  to  new  achievements  rather 
than  to  have  it  hampered  by  an  attempt  to  carry  a  mass  of  details  already 
in  hand. 

It  is  the  added  power  to  accomplish  results  which  gives  to  the  person 
skilled  in  accounts  the  great  advantage  over  the  person  deficient  in  this 
branch.  Throughout  history,  the  persons  who  have  given  their  attention  to 
the  cost  and  the  returns  of  given  lines  of  action  have  been  the  leaders  and 
commanders  of  the  business  world.  Those  who  through  lack  of  knowledge 
or  sluggishness  have  neglected  account-keeping  have  been  the  servants,  often 
the  poorly  paid  servants  of  those  better  informed. 

All  orderly  bookkeeping  entries,  in  whatever  books  originally  made,  are 
entered  with  a  view  to  their  final  effect  upon  ledger  accounts.  The  vital  dif- 
ference between  good  and  bad  bookkeeping  depends  on  the  clearness  or  vague- 
ness of  the  accounts  derived  from  the  first  records.  Hence,  it  is  essential  that 
a  bookkeeping  student  should,  first  of  all  ideas,  grasp  the  idea  of  an  account. 

Most  persons  who  study  beginning  bookkeeping  need  practice  in  business 
forms,  commercial  and  legal  papers  which  they  will  receive  and  make  out 
for  others  in  business  transactions.  The  papers  used,  should  be  associated 
with  the  transactions  involved  and  should  be  practiced  in  connection  with  the 
entries  until  the  one  will  immediately  suggest  the  other.  This  consideration 
calls  for  much  of  practice  and  detailed  drill  in  the  earlier  part  of  the  work. 
As  the  student  progresses,  all  needless  writing  of  forms  will  be  dropped.  The 
student  should  feel,  however,  that  every  detail  as  presented  is  to  be  mastered, 
for  only  by  a  thorough  mastery  of  each  part  can  the  whole  be  accomplished. 

"With  this  thought  in  mind,  we  may  safely  say  that  every  young  person 
should  apply  himself  diligently  to  the  study  of  account-keeping.  "We  trust 
that  the  person  who  enters  upon  this  work  may  realize  its  relation  to  his 
future  success,  and  give  to  it  his  closest  attention. 


6  PROGRESSIVE  BUSINESS  ACCOUNTING 

TO  THE  STUDENT 

You  are  required  to  write  several  exercises  before  beginning  transactions 
in  actual  business.  These  exercises  are  in  the  nature  of  tests  by  which  you 
will  show  that  paper,  blotter,  ruler,  pens,  pencils,  etc.,  are  properly  used, 
and,  later,  that  a  knowledge  of  records  and  accounts  is  acquired  sufficient  to 
enable  you  to  proceed.  Comply  with  the  directions  exactly  as  given.  Always 
think  before  doing.  If  at  any  time  errors  or  blots  appear,  discard  the  paper 
used  and  prepare  another  paper  so  that  you  can  submit  to  your  teacher  your 
best  work.     These  first  steps  must  be  taken  not  hurriedly  but  carefully. 

EXERCISE  I 

INFORMATION  #1.  Bookkeeping  paper  is  ruled  in  two  standard  ways 
called  ledger  and  journal.  There  are  many  varieties  of  each,  but  the  two- 
column  ledger  paper  and  the  two-column  journal  paper  are  the  common 
forms.  At  the  top  of  all  varieties  of  ruling  are  placed  three  lines  running 
from  left  to  right  called  headlines.  These  are  ruled  very  closely  together, 
and  are  placed  about  one  and  one-half  blue  line  spaces  above  the  first  writing 
line.  The  center  one  of  the  three  headlines  should  be  heavier  than  the  other 
two.  All  ruling  should  be  in  red  ink.  From  the  headlines  to  the  bottom  of 
the  sheet  are  ruled  vertical  lines,  which  divide  the  space  into  columns  suited 
for  journal  or  ledger  entries. 

EXPLANATION.  The  purpose  of  this  exercise  is  to  fix  in  mind  the 
lines  and  spaces  of  the  ledger  ruling  and  the  use  of  the  columns. 

DIRECTIONS.  Rule  a  sheet  of  writing  paper  in  ledger  form.  To  rule 
the  headlines,  lay  the  ruler  across  the  paper  with  the  in-slanting  or  bevel  side 
downward,  so  that  the  edge  will  not  touch  the  paper.  Press  the  ruler  firmly 
with  the  left  hand  and  draw  the  pen  evenly  from  left  to  right  so  that  the 
right  hand  draws  a  light  line.  Without  lifting  the  ruler,  commence  with  the 
pen  at  the  left,  turning  the  pen  point  inward,  drawing  the  second  line  some- 
what heavier  than  the  one  above.  Draw  the  lines  as  closely  together  as  pos- 
sible without  touching.  Draw  the  third  line  below  the  second,  making  it  no 
heavier  than  the  first. 

Next,  place  the  ruler  across  the  top  of  the  paper  and  make  pencil  dots 
exactly  in  center  from  left  to  right,  also  place  dots  at  bottom  of  sheet  in  the 
same  way.  Reverse  the  ruler  as  before  and  draw  three  lines  from  the  head- 
lines to  the  bottom  of  the  sheet,  using  the  pencil  dots  as  guide,  dividing  the 
page  vertically  into  two  equal  parts.  (The  left  side  is  called  the  debit  side; 
the  right,  the  credit  side.) 

Measure  and  rule  double  vertical  lines  one  and  three-eighths  inches  to 
the  left  of  the  right  margins  of  the  debit  and  credit  sides  and  a  single  line 
three-eighths  inch  to  the  left  of  each  right  margin.  (These  are  the  debit  and 
credit  money  columns;  the  double  line  preceding  dollars  and  the  single  line 
separating  dollars  from  cents,  together  make  one  money  column.) 

Rule  a  vertical  line  three-eighths  inch  to  left  of  each  money  column. 
(The  space  thus  made  is  called  the  folio  column.) 

Rule  two  vertical  lines  five-eighths  and  one  inch  from  the  left  margin  of 
the  debit  and  credit  sides.  (The  spaces  thus  made  are  date  columns.  The  first 
space  for  year  and  month,  the  second  for  day  of  month,  are  considered  one 
column.  The  wide  space  following  the  day  of  the  month  is  for  explanation. 
The  width  of  this  space  depends  on  the  width  of  the  entire  sheet.) 


PROGRESSIVE  BUSINESS  ACCOUNTING 


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On  the  reverse  side  of  the  ruled  ledger  sheet,  write  answers  to  the  follow- 
ing questions,  numbering  the  answers  to  correspond  with  the  question  numbers. 
All  written  answers  should  be  in  the  form  of  complete  sentences,  as  shown 
in  the  model  answers  given  below.     The  questions  should  not  be  copied. 

QUESTIONS.  1.  What  two  common  forms  of  ruling  are  used  in  book- 
keeping ? 

Ans.  1.  The  ledger  and  journal  are  the  common  forms  of  ruling  used 
in  bookkeeping. 

2.  Describe  the  headlines. 

Ans.  2.  The  headlines  are  the  ruled  lines  running  from  left  to  right 
at  the  top  of  the  written  portion. 

3.  The  center  vertical  ruling  of  the  ledger  divides  the  page  into  what 
two  parts? 

4.  Name  in  their  order  the  four  columns  in  each  side  of  the  ledger. 

5.  Why  are  the  date  columns  divided  into  two  parts? 

6.  Why  are  the  money  columns  so  divided? 

DIRECTIONS.  When  you  have  completed  these  requirements,  write  at 
the  top  of  the  ruled  page  the  exercise  number,  your  name,  and  date,  thus : 

and  pass  to  your  teacher  for  inspection.  If  the  form  and  answers  are  incor- 
rect, the  paper  will  be  returned  to  you  for  correction.  If  it  is  correct,  the 
paper  will  be  placed  in  the  college  file  as  a  specimen  of  j'our  work. 


^'l'','  "I  le,'  '•  ■  PROGRESSIVE  BUSINESS  ACCOUNTING 

EXERCISE  II 

INFORMATION  #2.  Business  is  the  process  of  changing  one  kind  of 
value  into  another  kind  of  value. 

#3.  The  purpose  of  the  business  man  is  to  exchange  things  of  less  value 
for  things  that  he  values  more  highly,  thus  making  a  profit. 

Example:  A  farmer  exchanges  with  a  miller  a  quantity  of  wheat  for  a  quantity 
of  flour.  The  farmer  has  made  a  profit  because  the  flour  is  worth  more  to  him  than 
the  wheat.  The  miller  has  made  a  profit  because  the  wheat  is  worth  more  to  him  than 
the  flour. 

4^4.  The  value  of  anything  in  business  is  measured  by  the  amount  of 
money  required  to  buy  the  thing. 

#5.  The  amount  of  profit  is  shown  by  the  money  cost  of  the  thing 
exchanged  as  compared  with  the  money  value  of  the  thing  received  for  it. 

Example:  A  man  buys  several  automobiles  for  cash  $10,000,  or  for  other  property 
worth  $10,000  in  cash.  He  sells  them,  receiving  in  exchange  cash  or  property  worth 
$12,000.    By  exchanging  these  values  in  this  way  his  profit  is  $2,000. 

#6.  Persons  conduct  business  by  changing  their  property  of  one  kind 
into  property  of  another  kind,  or  by  exchanging  their  property  with  other 
persons  for  cash  or  other  property. 

Example:  A  man  owns  timber  land  worth  $2,000,  and  cuts  from  it  wood  worth 
$1,000,  leaving  the  land  of  as  great  value  as  it  was  before.  This  is  a  business  trans- 
action in  which  no  dealing  is  carried  on  with  other  persons.  The  man  simply  changes 
one  kind  of  property  into  another  kind.  He  now  sells  the  wood  to  another  person 
who  pays  him  cash  $1,000  for  it.    This  is  also  a  business  transaction. 

#7.  The  entire  property  and  indebtedness  of  any  commercial  enterprise 
is  referred  to  as  the  business. 

#8.  All  records  of  a  business  are  divided  for  the  purpose  of  inspection 
and  comparison  into  different  parts  called  accounts,  each  of  which  is  con- 
sidered separately  from  the  whole. 

#9.  An  account  is  a  complete  entry  of  all  transactions  as  they  pertain 
to  a  given  part  in  the  business. 

#^0.  At  the  head  of  each  account  is  the  title;  below  to  the  left  are 
placed  the  values  which  the  remainder  of  the  business  has  contributed  to  this 
part  (debits)  ;  to  the  right  are  placed  the  values  which  this  part  has  conrtib- 
uted  to  the  remainder  of  the  business  (credits). 

#11.     The  ledger  is  the  book  of  accounts. 

4itl2.  The  following  general  rule  governs  debit  and  credit.  It  should 
be  committed  to  memory:  Debit  the  receiving  account;  credit  the  giving 
account. 

EXPLANATION.  One  account  in  every  buiness  is  the  cash  account. 
This  account  is  important  because  it  shows  when  and  from  whence  the  store 
of  cash  at  hand  receives  more  cash,  or  when  and  for  what  the  store  of  cash 
parts  with  some  of  the  money  held.  It  is  necessary  to  keep  this  account 
with  great  care,  because  by  it  one  should  be  able  to  tell  the  amount  of  money 
available  for  use. 

DIRECTIONS.  Rule  a  sheet  of  ledger  paper  as  directed  in  Exercise  I. 
and  open  a  cash  account  by  writing  the  title  Cash  in  the  center  at  the  top  as 
shown  in  the  model.  The  following  transactions  involve  the  use  of  more  than 
one  account,  but  only  the  one  with  cash  will  be  considered  in  this  exercise. 
Write  the  cash  account  from  the  transaction  given  below,  referring  to  the 
model  as  you  proceed. 


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TRANSACTIONS.  Sept.  1,  1909.  Henry  Miller  placed  $1,000  into  a 
cash  account  for  use  in  business. 

Debit  cash,  because  cash  is  the  receiving  account.  (See  Infor.  12.)  Notice  the 
place  for  the  year,  which  should  always  be  entered  at  the  beginning  of  an  account. 
Notice  that  the  explanatory  space  shows  from  what  source  the  cash  was  received. 
The  folio  column  is  not  used  because  this  entry  is  not  posted  from  another  book, 
but  is  entered  directly  from  the  transaction  in  this  place.  Notice  that  the  amount  is 
placed  in  the  space  of  the  money  column  provided  for  dollars.  The  place  for  cents 
is  not  used. 

Sept.  2.     Paid  cash  for  100  Sk.  Pearl  Flour  @  $1.65  per  sack. 

As  this  is  the  first  entry  on  the  credit  side,  enter  the  year  as  shown.  The  abbre- 
viation "Sk."  stands  for  sacks  or  sack.  The  sign  @  means  at  or  each.  Enter  as 
shown  in  the  model.  Cash  is  credited  because  cash  is  the  giving  account.  Repeat 
the  rule  above.     (Infor.  12.) 

Sept.  3.     Keceived  cash  for  10  Sk.  Pearl  Flour  @  $1.75. 

Notice  that  the  abbreviation  Sept.  is  not  repeated.  Any  entry  following  is  con- 
sidered September  until  a  change  of  month  is  reached.  Notice  especially  that  the 
figures  17.50  are  written  exactly  in  column  with  figures  of  same  order  above  and  below. 

3.  Received  cash  for  50  Sk.  Pearl  Flour  @  $1.70. 

4.  Paid  cash  for  50  brl.  XX  Flour  @  $5.50. 
Enter  as  above.    See  that  the  figures  are  in  column. 
6.     Paid  cash  for  100  brl.  XX  Flour  @  $5.45. 

Henry  Miller  places  $500  additional  into  the  cash  account. 

Paid  cash  for  100  brl.  XX  Flour  @  $5.50. 

Sold  250  brl.  XX  Flour  @  $6.00  per  brl.,  receiving  cash. 

Henry  Miller  took  back  $500  from  the  cash  for  use  of  the  business. 

Sold  for  cash  40  Sk.  of  Pearl  Flour  @  $1.80. 

Bought  for  cash  20  T.  of  Timothy  Hay  @  $12. 

Sold  for  cash  5  T.  Timothy  Hay  @  $15. 

Bought  for  cash  10  T.  Blue  Stem  Hay  @  $11. 

Sold  for  cash  15  T.  Timothy  Hay  @  $16,  10  T.  Blue  Stem  Hay  (g 


15. 

18. 

21. 

25. 

27. 

Oct.  5. 

7. 

10. 

15. 
$13.50. 

DIRECTIONS.  At  this  point  the  student  will  subtract  the  total  of  cash 
payments  from  the  total  of  cash  receipts  to  see  the  amount  of  cash  that  should 
be  on  hand.  Use  a  sharp  pointed,  medium  hard  pencil  with  which  place  the 
footings  of  both  sides  of  the  account  in  small,  neat  figures.     (See  model.) 


10  PROGRESSIVE  BUSINESS  ACCOUNTING 

From  examination  of  the  form  it  will  be  seen  that  the  receiving  side  of  cash 
shows  $3,624.50  taken  in  at  various  times.  The  credit  total  $2,385  subtracted 
from  the  debit  total  gives  the  amount,  $1,239.50,  which  should  equal  the 
amount  on  hand,  if  the  cash  were  counted. 

On  the  reverse  side  of  the  account  sheet,  answer  in  full  by  sentences  the 
following 

QUESTIONS.     1.     What  is  meant  by  the  term  business? 

2.  Why  do  men  engage  in  business? 

3.  What  is  the  measure  of  values? 

4.  How  is  the  amount  of  profit  in  any  one  thing  measured? 

5.  In  what  two  ways  are  values  in  a  business  changed? 

6.  How  is  a  busines  divided  for  purposes  of  inspection  and  comparison? 

7.  What  is  an  account? 

8.  What  is  meant  by  the  title  of  an  account? 

9.  What  is  the  name  of  the  book  in  which  accounts  are  kept? 

10.  Give  the  general  rule  for  debit  and  credit. 

11.  What  does  the  debit  side  of  the  cash  account  show? 

12.  What  does  the  credit  side  of  the  cash  account  show? 

13.  What  does  the  credit  subtracted  from  debit  total  of  cash  show? 
Having  completed  the   answers  to   above   questions,  at  the  top  of  the 

account  side  write  exercise  number,  your  name,  and  the  date,  as  directed 
before,  and  pass  the  paper  to  your  teacher  for  inspection. 

EXERCISE  III 

INFORMATION  #  13.  In  every  transaction,  value  is  changed  from  one 
or  more  parts  of  the  business  into  one  or  more  other  parts  of  the  business, 
therefore 

#  14.  In  every  transaction  one  or  more  accounts  must  be  debited,  and 
one  or  more  other  accounts  must  be  credited, 

4^  15.     The  debits  and  credits  must  be  in  equal  amounts. 

qijt  16.  Double  entry  bookkeeping  is  the  keeping  of  books  in  such  a  way 
as  to  show  all  debits  and  corresponding  credits  in  their  respective  accounts. 
There  must  be  at  least  one  debit  and  one  credit. 

:^  17.  The  sum  of  all  debit  footings  will  be  equal  to  the  sum  of  all 
credit  footings  if  the  work  is  correct. 

EXPLANATION.  The  same  transactions  as  given  in  Ex.  II.  will  be  given 
in  this  exercise.  In  this  exercise  it  will  be  necessary  to  make  entries  in  all  of 
the  accounts  affected,  instead  of  in  the  cash  account  only.  Kemember  that 
every  transaction  involves  a  debit  in  one  account  and  a  credit  in  another 
account.  Form  the  habit  of  determining  which  account  to  debit  first,  then 
select  the  account  to  credit.    /Iways  apply  the  rule  given  in  Infor.  #12. 

DIRECTIONS.  Take  a  sheet  of  ledger  paper  from  your  supplies,  and 
open  four  accounts  (see  model) :  Henry  Miller,  Proprietor,  at  top ;  Cash,  five 
lines  below;  Flour  account,  twelve  lines  below,  and  Hay  account,  seven  lines 
lower. 

TRANSACTIONS.     Sept.  1,  1909.    Henry  Miller  invests  cash  in  flour  and 

feed  business,  $1,000. 

"What  account  should  be  debited?  CASH,  because  cash  is  the  receiving  account. 
Make  the  debit  entry  as  in  previous  exercises,  but  be  careful  to  enter  on  line  below 


PROGRESSIVE  BUSINESS  ACCOUNTING 


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"Cash"  in  the  ledger,  not  on  the  line  below  "Henry  Miller."  Notice  that  the 
year  is  placed  at  the  beginning  of  all  accounts.  Notice  that  in  the  ledger  are  some 
additional  blue  vertical  lines  called  unit  rules.  These  are  to  aid  in  keeping  the 
column  straight.  The  explanatory  space  in  the  ledger  contains  memoranda  suited 
to    the    transaction.      No    set    form    for    the    memoranda    is    required.      What    account 


12  PROGRESSIVE  BUSINESS  ACCOUNTING 

should  be  credited?  Henry  Miller  account,  because  this  is  the  giving  account.  This 
credit  represents  Henry  Miller's  interest  in  the  business.  The  proprietor's  account 
is  usually  placed  first  as  here  shown. 

Sept.  2.     Bought  for  cash  100  Sk.  Pearl  Flour  @  $1.65. 

What  account  should  be  debited?  FLOUR,  because  flour  is  the  receiving  account. 
The  student  may  write  in  the  explanatory  space  such  memoranda  as  will  serve  to 
explain  best  the  transaction  to  him.  What  account  should  be  credited?  Cash.  Why? 
The  amounts  are  omitted  in  some  of  the  model  forms,  but  should  be  entered  correctly 
by  the  student. 

Sept.  3.     Sold  for  cash  10  Sk.  of  Pearl  Flour  @  $1.75. 

What  account  should  be  debited?  Cash.  Why?  Because  cash  is  the  receiving 
account.    Why  credit  flour  account? 

Sept.  3.     Sold  for  cash  50  Sk.  Pearl  Flour  @  $1.70. 

Remember  to  enter  the  debit  first,  then  the  credit.  Use  ditto  marks  in  the 
explanation  column  to  save  writing. 

Sept.  4.     Bought  for  cash  50  brl.  XX  Flour  @  $5.50. 

See  transaction  on  Sept.  2,  above. 

Sept.  6.     Bought  for  cash  100  brl.  XX  Flour  @  $5.45. 

Sept.  15.  Received  from  Henry  Miller  cash  to  be  added  to  his  invest- 
ment account,  $500. 

Debit  Cash;   credit  Henry  Miller,  Investment. 

Sept.  18.     Bought  for  cash  100  brl.  XX  Flour  @  $5.50. 

Sept.  21.     Sold  for  cash  250  brl.  XX  Flour  @  $6.00. 

Sept.  25.  Henry  Miller  takes  back  $500  in  cash  on  his  investment 
account. 

Debit  Henry  Miller,   Prop.;    credit  Cash.     Why' 

Sept.  27.     Sold  for  cash  40  Sk.  Pearl  Flour  @  $1.80. 

Oct.  5.     Bought  for  cash  20  T.  Timothy  Hay  @  $12. 

What  account  is  to  be  debited?  Hay  account.  Why?  Because  Hay  is  the 
receiving  account. 

Oct.  7.     Sold  for  cash  5  T.  Timothy  Hay  @  $15. 

Oct.  10.     Bought  for  cash  10  T.  Blue  Stem  Hay  @  $11. 

Oct.  15.  Sold  for  cash  15  T.  Timothy  Hay  @  $16,  and  10  T.  Blue 
Stem  Hay  @  $13.50. 

DIRECTIONS.  After  the  above  entries  are  completed,  pencil  foot  the 
debit  and  credit  sides  of  all  accounts.  Notice  that  no  pencil  footing  is 
required  where  there  is  but  one  item,  as  in  the  debit  side  of  the  proprietor's 
account.  If  correct  entries  have  been  made  for  all  transactions,  the  footings 
of  the  debit  side  of  all  the  accounts  should  equal  the  footings  of  the  credit 
side  of  all  the  accounts.  Total  these  footings  as  suggested  and  if  the  debit 
total  equals  the  credit  total,  you  can  consider  that  the  items  have  been 
entered  in  both  debit  and  credit  sides  correctly.  Make  these  footings  using 
pencil  in  the  explanation  space  at  the  foot  of  the  page,  placing  the  debits 
and  credits  in  their  respective  sides. 

If  correct,  w^rite  on  the  opposite  side  of  the  ledger  sheet  the  answers  to 
the  following 

QUESTIONS.  1.  What  is  the  effect  of  every  transaction  on  the  busi- 
ness ? 

2.  "What  sort  of  entries  does  every  transaction  require? 

3.  What  is  said  of  the  equality  of  debits  and  credits? 

4.  What  is  the  characteristic  of  double  entry  bookkeeping? 

5.  By  what  process  is  one  led  to  believe  that  all  posting  has  been  made 
in  a  ledger. 

Having  completed  all  entries,  if  the  work  is  correct  and  neat,  place  at 
the  top  of  the  account  forms  the  regular  heading  and  pass  to  the  instructor 
at  once. 


PROGRESSIVE  BUSINESS  ACCOUNTING  13 

EXERCISE  IV 

INFORMATION  #  18.  The  Merchandise  account  is  the  account  with 
movable  goods  which  are  bought  to  be  sold  at  a  profit. 

Remark:  In  exercise  III.  the  accounts  with  flour  and  with  hay  could  have  been 
placed  in  one  account  called  Merchandise.  Where  many  different  things  are  bought 
and  sold  it  is  not  advisable  to  keep  an  account  with  each  of  them.  In  a  store, 
instead  of  keeping  accounts  with  each  of  the  small  articles,  as  tea,  sugar,  starch, 
raisins,  etc.,  one  account  called  Merchandise  includes  all  of  them.  In  a  business 
wthere  Furniture,  Hardware,  Saddlery  and  Funeral  Supplies  are  dealt  in,  each  of 
these  divisions  is  of  enough  importance  to  be  considered  separately,  and  to  have 
separate   accounts   rather   than   to   call  all   Merchandise. 

#  19.     The  Real  Estate  account  is  the  account  with  houses  and  lands. 

Remark:  As  with  merchandise,  if  several  pieces  of  real  estate  are  owned 
for  speculative  purposes,  it  would  be  better  to  keep  an  account  with  each  piece 
separately,  giving  it  a  distinct  title  showing  its  location.  If  one  property  is  considered 
which  may  be  added  to  or  taken  away  from  at  different  times,  the  title  Real  Estate 
is  preferable. 

EXPLANATION.  In  the  following  transactions  John  Sawyer  invests 
cash  in  a  business  in  which  Merchandise  and  Real  Estate  are  bought  and 
sold  for  cash.  These  transactions  will  give  additional  drill  in  debit  and 
credit.     Refer  to  Infor.  ^^12  when  in  doubt  as  to  debit  and  credit. 

DIRECTIONS.  Take  a  sheet  of  ruled  ledger  paper  from  your  supplies 
and  open  accounts  as  follows :  John  Sawyer,  Proprietor,  on  the  first  line : 
Cash,  fifth  line  from  top;  Merchandise,  tenth  line  below  Cash;  Real  Estate, 
tenth  line  below  Merchandise.  As  you  take  up  the  transactions  that  follow, 
remember  that  every  transaction  affects  a  receiving  account  (to  be  debited) 
and  a  giving  account  (to  be  credited).  Remember  to  always  enter  the  debit 
first,  then  the  credit. 

TRANSACTIONS.  Nov.  1,  1909.  John  Sawyer  invests  in  business 
$10,000  in  cash.  (Enter  as  in  previous  exercise.  The  student  need  not  make 
explanatory  entries  until  instructed  to  do  so  in  a  more  advanced  part  of 
the  book.) 

2.  He  bought  for  cash  sundry  merchandise,  paying  $6,590.50. 
Remark:    In  this  exercise  the  exact  articles  bought  and  sold  will  not  be  considered. 

They  are  assumed  to  be  entered  on  bills  when  the  sales  are  made,  which  should  be 
kept  so  that  they  can  be  referred  to  at  any  time.  The  student  will  give  his  entire 
attention  to  debiting  and  crediting  the  accounts  affected. 

3.  Sold  for  cash  merchandise  per  bill  rendered,  $1,320.60. 

4.  Bought  for  cash  merchandise  per  bill  rendered,  $520.98. 

4.  Sold  for  cash  merchandise  per  bill  rendered,  $4,291.85. 

5.  Bought  for  cash  a  house  and  ground  for  $6,500. 

The  student  at  this  point  may  pencil  foot  the  cash  account  to  see  how 
much  cash  remained.  Remember  to  make  the  pencil  footing  so  small  and 
so  close  to  the  figures  just  above,  that  there  will  be  room  for  an  entry  on 
the  following  line. 

Nov.  7.  Bought  merchandise  per  bill  rendered,  paying  for  it  all  cash 
on  hand  except  $500.97. 

7.  Paid  cash  for  the  improvements  of  the  real  estate,  $150. 

8.  Sold  merchandise  for  cash,  per  bill,  $32.09. 

9.  Sold  a  lot  from  the  real  estate  for  cash,  $800. 

10.  Paid  cash  for  the  additional  improvements  on  the  real  estate,  $300. 

11.  Sold  merchandise,  per  bill,  for  cash,  $650.42. 


14  PROGRESSIVE  BUSINESS  ACCOUNTING 

The  student  will  now  find  the  amount  of  cash  on  hand  by  pencil  footing 
the  debit  and  credit  sides  of  the  cash  account.  Add  the  previous  pencil 
figures  to  the  amounts  that  follow,  thus  the  total  of  the  debit  column  is 
$17,094.96. 

12.  John  Sawyer  withdrew  from  the  business  all  cash  on  hand  except 
$33.48. 

Caution:  Compute  the  amount  on  a  separate  sheet  of  paper,  so  as  not  to  spoil 
the  ledger  sheet. 

13.  Sold  all  the  remaining  merchandise  for  cash,  $2,200. 
15,     Sold  all  Oie  real  estate  remaining  for  cash,  $7,500. 
DIRECTIONS.     Pencil  foot  the  columns  in  each  account,  and  see  that 

the  sum  of  the  debit  footings  equals  the  sum  of  the  credit  footings  as  in  the 
previous  exercise. 

QUESTIONS.     1.     What  does  the  merchandise  account  represent? 

2.     When  should  the  merchandise  account  be  divided? 

8.     What  does  the  real  estate  account  represent? 

4.  When  should  the  real  estate  account  be  divided? 

5.  How  can  the  amount  of  cash  at  any  time  be  found? 

6.  When  pencil  footing  a  second  time,  are  the  pencil  footings  above 
included  in  the  total? 

After  answering  the  above  questions  fully  on  the  reverse  side  of  the 
exercise,  place  heading  at  top  of  exercise,  and  submit  the  work  as  before. 

EXERCISE  V 

INFORMATION  #  20.  The  ledger  contains  all  the  entries  grouped  with 
reference  to  the  accounts  affected. 

The  student  will  readily  see  that  while  the  ledger  shows  the  results  of  the 
business  transactions,  it  does  not  give  a  complete  record  of  all  the  facts  pertaining 
to  any  transaction,  for  three  reasons:  (1)  Any  transaction  appears  in  at  least  two 
different  places  in  the  ledger,  so  that  it  cannot  be  seen  there  in  its  entirety  in  onQ 
place.  (2)  There  is  not  room  in  the  ledger  to  record  all  the  facts  relative  to  a  given 
transaction.  (3)  It  would  be  impossible  to  take  the  time  to  turn  to  the  ledger  accounts 
and  make  the  required  entries  when  the  transactions  are  being  carried  out  unless 
the  transactions  are  very  few.  Therefore,  the  original  entries  are  not  as  a  rule  made 
in  the  ledger,  but  are  made  in  some  book  of  first  or  original  entry  and  from  that  book 
carried  to  the  ledger. 

4^  21.  The  journal  or  daybook  journal,  as  it  is  sometimes  named,  is  the 
book  of  original  entry. 

In  the  journal,  entries  are  made  in  the  order  of  their  occurrence.  It  contains 
room  for  a  full  explanation  of  the  transactions  so  that  reference  can  be  made  to  it 
to  refresh  one's  memory  with  reference  to  the  exact  terms,  amounts,  a:nd  persons 
involved.  Later  the  student  will  find  that  it  is  advantageous  to  divide  the  journal 
entries  according  to  their  kind  among  other  books  of  original  entry,  as  the  cash 
book,  the  sales  book,  the  purchase  book,  but  when  such  books  are  kept  they  are  to 
be  regarded  as  parts  of  the  journal,  and  entries  made  in  them  are  properly  termed 
journal  entries. 

#  22.  The  journal  entry  consists  of  the  date  of  the  transaction,  the 
ledger  titles  affected,  a  complete  memorandum  of  the  transaction,  and  the 
amounts. 

The  journal  may  be  submitted  as  evidence  in  case  of  a  dispute  requiring  legal 
settlement.  For  this  purpose  it  is  not  satisfactory  if  it  shows  any  erasures,  any  missing 
pages,  or  other  indications  that  entries  have  been  altered  after  being  made.  Journal 
entries  should  be  made  immediately  after  the  occurrence  of  the  transaction. 


PROGRESSIVE  BUSINESS  ACCOUNTING 


15 


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EXPLANATION.  The  student  is  required  to  rule  a  journal  in  this  exer- 
cise.   Refresh  the  memory  by  referring  to  ruling  directions  in  Exercise  I. 

DIRECTIONS.  Take  a  sheet  of  writing  paper  and  rule  headlines  across 
the  top. 

Rule  vertical  lines,  spacing  as  shown  in  the  form. 

After  ruling,  answer  on  back  of  sheet  the  following 

QUESTIONS.  1.  Why  is  a  complete  record  of  the  transaction  not 
found  in  the  ledger? 

2.  In  what  order  do  entries  appear  in  the  ledger? 

3.  What  is  the  book  of  original  entry? 

4.  What  does  the  journal  contain? 

5.  What  can  j'ou  say  of  the  erasures  in  the  journal  ? 

6.  When  should  journal  entries  be  made? 

Head  this  exercise  as  usual  and  submit  vour  work. 


EXERCISE  VI 

INFOHMATION  #23.  JournalLzing  is  the  process  of  selecting  the 
proper  titles  to  be  debited  and  credited  in  a  given  transaction,  and  of  enter- 
ing them,  together  with  necessary  explanation,  in  a  journal,  or  other  book 
taking  the  place  of  a  journal. 

#  24.  Posting  is  the  process  of  transferring  the  debits  and  credits  of  a 
journal  to  the  respective  accounts  of  a  ledger. 

#  25.  Folio  columns  are  columns  found  in  all  books  to  or  from  which 
posting  is  done.  In  the  folio  column  of  the  ledger  is  placed  the  journal  page 
from  which  an  entry  has  been  posted;  in  the  folio  column  of  a  journal  is 
placed  the  ledger  page  of  the  account  to  which  the  entry  is  posted.  The 
same  is  true  if  posting  is  done  from  other  books  than  the  journal. 

#  26.  Posting  is  generally  done  periodically ;  as,  once  a  day,  once  a 
week,  or  once  a  month. 

#  27.  Any  one  account  can  be  posted  before  the  others,  if  it  is  desirable 
to  do  so. 

#  28.  The  difference  between  the  debit  and  credit  footings  of  any  ledger 
account  is  called  the  balance  of  the  account. 

#  29.  A  ledger  balance  showing  the  debit  side  greater  than  the  credit 
side  is  called  a  debit  balance:  if  it  shows  the  credit  side  greater,  it  is  called 
a  credit  balance. 


16 


PROGRESSIVE  BUSINESS   ACCOUNTING 


#  30.  The  sum  of  all  debit  balances  in  a  ledger  is  equal  to  the  sum 
of  all  credit  balances,  if  the  posting  is  correctly  done. 

#  31.  A  list  of  all  the  open  ledger  accounts  with  debit  balances  in 
one  column  and  credit  balances  in  another  column  is  called  a  trial  balance, 
and  if  the  two  columns  foot  equally  the  ledger  is  said  to  be  in  balance,  and 
hence  the  posting  is  assumed  to  be  correct. 

The  trial  balance  is  sometimes  taken  daily,  as  in  a  bank,  but  more  often 
monthly.     It  may  be  taken  at  any  time  desired. 

#  32.  The  Live  Stock  account  is  the  account  with  domestic  animals, 
as  horses,  cattle,  sheep,  etc. 

EXPLANATION.  In  this  exercise  the  student  will  be  required  to  enter 
the  transactions  of  a  certain  business  in  the  journal,  to  post  from  the  journal 
to  the  ledger,  and  to  take  a  trial  balance  of  the  ledger.  The  ledger  posting 
is  to  be  done  daily ;  that  is,  all  entries  of  a  given  date  are  to  be  posted  before 
passing  to  the  next  date. 


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DIRECTIONS.  Rule  a  sheet  of  writing  paper  in  journal  form,  both  sides, 
and  page  the  sides  1  and  2.  Remember  that  the  odd  number  pages  are 
always  at  upper  right  hand  corner,  even  pages  always  at  upper  left  hand 
corner.  Rule  a  sheet  of  paper  in  ledger  form,  both  sides,  and  page  the  sides 
1  and  2.  Rule  a  sheet  journal  ruling  on  one  side  to  be  used  for  trial  balance. 
On  page  one  of  ledger  open  an  account  with  Robert  Browning,  Proprietor, 
at  top,  and  five  lines  below  an  account  with  Cash.  Page  2,  open  an  account 
at  the  top  with  Merchandise,  and  one-third  way  down  the  page  an  account 
with  Real  Estate;  two-thirds  down  the  page  open  an  account  with  Live 
Stock. 

Date  your  journal  at  top  as  in  model,  using  the  date  there  given, 

TRANSACTIONS.  Sept.  1,  1909.  Robert  Browning  commenced  a  gen- 
eral business,  investing  cash  $15,000. 

Determine  what  ledger  account  must  be  debited  and  what  account 
credited. 

Enter  in  the  journal,  observing  closely  the  form  given  in  the  text.  Note  that 
the  date  is  given  first.  Tien  passing  the  folio  column,  enter  in  the  next  column 
the  ledger  titles  affected.  The  title  to  be  debited  is  entered  on  the  first  line  to  the 
extreme  left  of  the  space,  and  corresponds  with  the  amount  found  in  the  left  or  debit 
money  column.  The  title  to  be  credited  is  placed  one-half  incli  to  the  right  of  the 
debit  title  on  the  line  below  and  corresponds  with  the  amount  placed  in  the  credit 
money  column.  In  the  space  following  the  titles  write  an  explanation  clear  and 
complete  enough  to  show  the  facts  of  the  transaction.  The  explanatory  part  is  in 
a  column  by  itself  and  may  occupy  many  more  lines  than  the  titles  and  amounts, 
if  necessary. 

Sept.  1.  Bought  certain  buildings  and  ground,  as  per  deed,  of  0.  Nelson 
for  cash,  $4,850. 

First  determine  the  accounts  to  be  debited  and  credited. 

It  is  not  necessary  to  repeat  the  same  date  on  journal  except  when  forwarded 
to  a  new  page,  when  the  date  should  be  repeated. 

Enter  the  titles  on  the  line  below  the  last  line  used  for  (previous  entries  or 
explanation.  Remember  to  enter  the  debit  title  and  amount  first,  then  the  credit 
title  and  amount.    See  model. 


18 


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Bought  of  Grant  &  Williams  a  bill  of  merchandise  as  per  invoice  dated 
today  for  cash,  $2,960.51. 

Bought  of  Oscar  Nelson  three  heads  of  horses  for  cash,  $480. 

Debit  Live  Stock  account,  because  the  live  stock  part  of  the  business  receives 
this  value. 

Sold  R.  W.  Emerson  for  cash  10  brl.  salt  @  $1.70. 

Sold  Thomas  Stone  a  horse  for  cash,  $175. 

Sold  Samuel  Huntington  for  cash  a  lot  from  the  real  property,  as  per 
deed  given,  for  cash,  $950. 

DIRECTIONS.  As  the  above  closes  the  first  day's  entries,  the  accounts 
will  be  posted.  Place  the  journal  to  the  left  and  the  ledger  to  the  right. 
With  blotter  on  journal  under  the  left  hand,  move  down  the  column  until 
you  arrive  at  the  first  debit  title.  Cash.  Post  this  debit  to  the  Cash  account 
as  shown  in  model,  entering  the  date  as  there  shown.  In  the  folio  column 
place  figure  1,  with  "J"  'before  to  indicate  that  the  posting  was  done  from 
page  1  of  the  journal.  Enter  the  amount  in  the  money  column.  Then  turn 
back  to  the  journal  and  place  in  the  folio  column  of  the  journal  the  ledger 
page  1  on  which  the  cash  account  appears.  Remember  that  the  post  marks 
must  be  entered  at  the  time  of  the  posting  or  they  will  be  of  little  value,  as 
will  be  shown  later. 

Next  drop  your  blotter  on  your  journal  until  you  arrive  at  the  following 
cash  debit  of  $17,  which  post  to  the  Cash  account  also.  Be  sure  to  enter  the 
page  of  the  journal  in  the  ledger  and  the  page  of  the  ledger  in  the  journal 
when  the  posting  is  done.  Pass  down  to  the  other  Cash  debits  of  $175  and 
$950,  which  post  as  before.     (See  model.) 

After  cash  debits  are  posted,  post  the  next  unposted  debit.  It  is  the  debit 
of  Real  Estate  $4,850.  This  account  is  on  page  2  of  the  ledger,  hence,  when 
you  have  posted  to  this  account,  place  2  before  the  title  in  the  journal. 

Post  the  next  debit,  Mdse.,  as  before.  Post  the  last  unposted  debit,  Live 
Stock,  to  the  Live  Stock  account.  Look  up  the  folio  column  to  see  if  each 
of  the  seven  debit  titles  is  preceded  by  a  post  mark.  If  so,  proceed  to  post 
the  credits. 

Begin  with  Robert  Browning  credit,  which  post  to  that  account  on  page 
1  of  ledger.  Next  post  all  the  Cash  credits — three  in  number.  After  that 
to  Merchandise,  Live  Stock,  and  Real  Estate. 

Read  Infor.  #  27,  28,  29,  30,  31. 


PROGRESSIVE  BUSINESS  ACCOUNTING 


19 


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After  you  have  posted  the  ledger,  take  a  Trial  Balance,  heading  your 
Trial  Balance  sheet  as  shown  in  the  model  form.  (1)  Enter  all  the  ledger 
titles  with  their  pages  on  the  trial  balance  sheet.  (2)  Find  the  debit  or 
credit  balance  of  each  account  and  place  that  balance  in  the  debit  or  credit 
column  of  the  trial  balance  sheet.  Pencil  footing  need  only  be  done  in  the 
cash  account.  After  the  balances  are  entered,  foot  and  rule  a  single  addition 
line  above  the  footing  and  double  closing  lines  below  the  left  side  of  the  page 
and  the  footings,  as  shown. 

The  books  being  found  in  balance,  the  student  will  proceed  to  journalize 
the  transactions  of  Sept.  2.    Continue  on  page  2  of  the  journal. 

TRANSACTIONS.  Sept.  2.  Sold  George  Taylor,  for  cash,  2  brl.  salt 
@  $1.70,  20  sk.  flour  @  $1.45,  5  sk.  sugar  @  $5.95.  Make  journal  entry.  Why 
is  Cash  debited?    Why  is  Merchandise  credited? 

Bought  of  Wm.  Floyd,  7  head  of  horses  for  cash,  $1,150. 

Sold  to  John  Hart  for  cash,  8  head  of  horses  for  $1,650. 

Paid  Clayton  Smith,  cash  for  repairs  to  building,  $42.90. 

Debit  Real  Estate.    Why? 

DIRECTIONS.  The  student  will  now  post  the  ledger  as  before,  and 
after  posting,  pencil  foot  all  the  accounts  having  more  than  one  item  and 
take  a  trial  balance.  Rule  a  heading  across  the  page  below  that  already 
made.  No  space  should  be  wasted,  as  three  trial  balances  are  to  be  taken  on 
this  sheet. 

The  student  will  observe  on  examining  the  trial  balance  that  on  this 
date  three  accounts  show  that  these  divisions  of  the  business  have  received 
more  value  than  they  have  given.     Which  are  they?     Two  accounts  show 


20  PROGRESSIVE  BUSINESS   ACCOUNTING 

two  divisions  of  the  business  have  given  more  value  than  they  have  received. 
Name  them. 

TRANSACTIONS.  Sept.  3.  Sold  to  O'Keen  &  O'Keen  for  cash  all  mer- 
chandise on  hand,  per  bill,  receiving  $3,000. 

Bought  of  George  Taylor,  for  feed  of  live  stock,  30  bu.  corn  @  50c,  2  T. 
hay  @  $12.50,  paying  cash. 

Debit  Live  Stock.    Why? 

Bought  of  William  Floyd,  as  per  deed,  adjacent  real  estate  for  cash 
$5,000. 

DIRECTIONS.  Post  the  entries  of  the  3d  to  the  ledger  accounts,  pencil 
foot,  and  take  a  third  trial  balance,  recording  it  below  the  trial  balances  of 
the  first  and  second. 

On  the  reverse  side  of  the  trial  balance  sheet  write  answers  to  the  fol- 
lowing 

QUESTIONS.     1.     What  is  journalizing? 

2.  What  is  posting? 

3.  Explain  the  use  of  the  folio  column. 

4.  What  do  you  understand  by  the  balance  of  an  account? 

5.  What  are  the  two  kinds  of  ledger  balances? 

6.  What  is  the  trial  balance?    Of  what  value  is  it? 

7.  How  often  are  the  trial  balances  most  frequently  taken? 

8.  When  are  post  marks  to  be  entered? 

9.  What  does  a  debit  balance  show  with  reference  to  an  account? 
10.     What  does  a  credit  balance  show? 

DIRECTIONS.  After  answering  the  above  questions,  write  the  transac- 
tion number,  your  name,  and  date  at  the  top  of  first  page  of  journal,  first 
page  of  ledger,  and  trial  balance  sheet,  and  pin  these  three  sheets  together 
in  the  upper  left-hand  corner,  having  the  pin  at  the  angle  shown  in  the  illus- 
trated journal,  and  hand  all  in  for  inspection. 

EXERCISE  VII 

INFORMATION  #33.  The  Furniture  and  Fixtures  account  is  the 
account  with  movable  property  of  permanent  value  purchased  for  the  general 
use  of  the  business;  as,  chairs,  tables,  stoves,  shelves,  counters,  etc. 

#  34.  The  Teams  account  is  the  account  with  horses,  wagons  and  the 
like,  used  for  delivery  of  goods  or  other  work. 

#  35.  The  Expense  account  is  the  account  of  things  to  be  consumed 
for  the  general  benefit  of  the  business;  as,  books  and  stationery,  fuel,  hired 
help,  rents,  etc. 

#  36.  The  cash  value  of  an  account  is  the  selling  worth  of  the  remain- 
ing property  charged  to  that  account.  This  is  found  by  making  a  list  of  the 
property  and  its  worth,  called  an  inventory. 

#  37.  The  gain  of  an  account  is  the  excess  of  the  sum  of  its  total  credits 
and  its  cash  value  over  its  total  debits. 

#  38.  The  loss  of  an  account  is  the  excess  of  its  total  debits  over  the 
sum  of  its  total  credits  and  its  cash  value. 

#  39.  Once  each  year  (or  other  period)  the  losses  and  gains  are  carried 
from  the  commercial  accounts  to  the  proprietor's  account.  This  process  is 
called  closing  the  ledger. 

#  40.  The  balance  of  the  proprietor's  account  after  the  transfer  of 
gains  and  losses  from  the  other  accounts  shows  the  net  worth. 


PROGRESSIVE  BUSINESS  ACCOUNTING  21 

EXPLANATION.  In  the  following,  accounts  will  be  opened  with  Pro- 
prietor, Cash,  Merchandise,  Furniture  &  Fixtures,  Teams,  and  Expense.  The 
student  will  be  required  to  post  certain  entries  of  transactions  to  these 
accounts,  after  which  he  will  take  a  trial  balance  to  verify  his  posting.  He 
will  then  close  the  ledger,  after  which  he  will  take  a  second  trial  balance 
after  closing. 

DIRECTIONS.  Take  a  sheet  of  journal  and  one  of  ledger,  paging  them. 
Open  accounts  in  the  ledger  with  H.  A.  Oliver,  Proprietor,  allowing  10  lines ; 
Cash,  15 ;  Merchandise,  10 ;  Furniture  &  Fixtures,  10 ;  Teams,  10 ;  Expense,  10. 

In  the  purchase  or  sale  of  merchandise  the  student  will  not  be  required 
to  write  any  items  or  prices,  as  it  is  assumed  that  all  items  are  entered  on 
bills,  copies  of  which  are  retained  for  reference. 

TRANSACTIONS.  Dec.  1,  1909.  H.  A.  Oliver  begins  business  with  fol- 
lowing property:    Cash,  $2,560;  Merchandise,  cash  value,  $6,290;  Teams,  cash 

value  $725. 

In  this  transaction,  three  accounts  receive  values.  These  should  be  journalized 
as  shown  in  model  form  on  page  69.  One  account  (Proprietor)  gives  the  entire  value. 
This  account  should  be  credited  with  their  sum. 

Paid  Edward  Reed  for  rent  of  store  room  to  January  1,  1910,  $30. 

Debit  Expense.    Why?     Expense  is  the  receiving  account. 

Paid  the  Eastern  Mfg.  Co.  for  furniture  and  fixtures  as  listed  on  their 
bill,  $269.40. 

2.     Sold  O.  0.  Wolcott,  for  cash,  merchandise  per  bill,  $69.54. 
Sold  Geo.  Gerry,  for  cash,  merchandise  per  bill,  $132.60. 
Sold  James  Smith,  for  cash,  merchandise  per  bill,  $16.47. 
Paid  cash  for  books  and  stationery  for  store  use,  $23.90. 
Paid  cash  for  feed  and  care  of  horses,  $10. 

4.  Bought  of  Gwinnet,  Lyman  &  Co.  merchandise  per  bill,  for  cash, 
$1,231.60. 

4.     Paid  Oscar  Anderson,  cash  for  wages  to  date,  $6. 
(Debit  Expense.) 

6.     Sold  Frank  Lightfoot,  for  cash,  merchandise  per  bill,  $295.81. 

15.  Sold  to  Edward  Read  the  property  charged  to  Teams,  receiving  in 
payment  a  refrigerator  and  other  fixtures  per  bill  valued  at  $800. 

18.    Paid  Oscar  Anderson,  wages  to  date,  $24. 

20.  Sold  Samuel  Huntington,  merchandise  per  bill  rendered,  •  $650.29, 
receiving  cash  in  payment. 

30.     Paid  John  Sawyer  cash  for  fuel,  per  bill,  for  heating  purposes,  $42.80. 

DIRECTIONS.  After  above  entries  have  been  journalized  correctly, 
post,  pencil  foot  the  ledger,  and  take  a  trial  balance,  dating  the  trial  balance 
Dec.  31,  1909.    Use  a  separate  sheet  of  paper  for  the  trial  balance. 

Read  Infer.  #  37,  38,  39,  40  again. 

INFORMATION  #  41.  When  the  ledger  is  closed,  the  losses  and 
gains  from  all  accounts  are  posted  to  one  account  called  the  Loss  &  Gain 
account.  This  account  shows  all  losses  on  the  debit  side,  and  all  gains  on 
the  credit  side.  The  difference  between  the  total  losses  and  total  gains  is 
called  the  net  gain  or  the  net  loss.  The  net  gain  or  loss  is  posted  to  the 
proprietor's  account  or  otherwise  disposed  of. 

#  42.  When  a  ledger  is  closed,  and  at  other  times  to  be  mentioned  later, 
entries  are  made  directly  in  the  ledger  account;  i.  e.,  they  are  not  posted 


22 


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24  PROGRESSIVE  BUSINESS   ACCOUNTING 

to  the  ledger  from  some  other  book.  Such  entries  are  made  in  red  ink,  the 
red  indicating  that  the  entry  is  to  be  posted  to  the  opposite  side  of  some 
other  account  or  to  the  opposite  side  of  the  same  account  below  the  ruling. 
When  a  red  ink  entry  is  posted  to  the  opposite  side  of  some  different  account, 
post  marks  should  invariably  be  placed  in  the  folio  columns  of  both  accounts. 
When  the  entry  is  posted  below  tbe  ruling  in  the  same  account,  the  post 
mark  is  not  needed.  Sometimes  the  posting  of  a  red  ink  entry  in  a  ledger 
is  called  "carrying"  the  amount.  This  term  is  properly  used  when  it  refers 
to  posting  from  one  side  to  the  other  of  the  same  account. 

#  43.     To  close  a  ledger,  six  steps  are  required. 

First  Step.  Enter  (red  ink)  the  cash  values  of  accounts  showing  loss 
or  gain,  using  the  explanation  "Inventory." 

Second  Step.  Enter  (red  ink)  the  difference  of  accounts  showing  loss 
or  gain  in  the  lesser  side,  writing  In  the  explanatory  space  the  title  "Loss 
and  Gain." 

Third  Step.  Rule  the  loss  and  gain  accounts;  carry  (black  ink)  the 
inventories  to  the  opposite  side  below  the  ruling;  post  (black  ink)  the  Loss 
and  Gain  entries  to  the  opposite  side  of  Loss  &  Gain  account,  using  for 
explanation  the  name  of  the  account  you  are  closing. 

Fourth  Step.  Enter  (red  ink)  the  difference  of  Loss  &  Gain  account  in 
the  lesser  side,  writing  in  the  explanatory  space  the  title  (usually  proprietor) 
of  the  account  to  which  the  net  gain  or  loss  is  to  be  posted,  and  rule  the 
account. 

Fifth  Step.  Post  (black  ink)  the  entry  of  Loss  &  Gain  account  to  the 
opposite  side  of  proprietor's  account.  Enter  (red  ink)  the  difference  of  pro- 
prietor's account  in  the  lesser  side,  using  explanation  "Net  Worth,"  rule 
the  account,  and  carry  (black  ink)  the  net  worth  to  opposite  side  below  the 
ruling. 

Sixth  Step.  Enter  (red  ink)  the  difference  of  accounts  that  do  not  show 
loss  or  gain  in  the  lesser  side,  using  the  explanation  "Balance,"  rule  the 
accounts,  and  carry  (black  ink)  the  balance  to  the  opposite  side  below  the 
ruling. 

As  a  proof  of  work,  trial  balances  should  be  taken  before  and  after 
closing.     The  form  and  method  of  taking  inventories  are  explained  in  A  95. 

DIRECTIONS.    After  taking  the  trial  balance,  proceed  to  close  the  ledger. 

Find  the  cash  value  of  each  account  except  the  proprietor's. 

Cash — ^By  counting  the  cash  we  could  find  that  the  amount  held  is 
$2,087.01,  which  is  equal  to  the  balance  shown  by  the  ledger  account.  The 
account,  therefore,  shows  neither  loss  nor  gain. 

Merchandise — By  taking  an  inventory  or  list  of  all  merchandise  on  hand 
we  could  find  that  the  cash  value  of  goods  not  sold  is  $6,850. 

Furniture  &  Fixtures — By  taking  an  inventory  of  property  charged  to 
this  account,  we  could  find  that  it  is  now  worth  $1,050. 

Teams — No  property  remains  in  this  account. 

Expense — Of  the  property  charged  to  this  account,  we  could  find  that 
what  remains  has  a  cash  value  of  $40. 

As  directed  in  the  first  step,  the  student  will  now  enter  the  present  inven- 
tories to  the  credit  of  Mdse.,  Furn.  &  Fixt.,  and  Exp.,  as  shown  in  the  model, 
using  red  ink. 

As  directed  in  the  second  step,  enter  the  differences  of  Mdse.,  Furn.  & 


PROGRESSIVE  BUSINESS   ACCOUNTING  25 

Fixt.,  Teams,  and  Expense,  using  the  posting  title  Loss  &  Gain. 

Open  an  account  with  Loss  &  Gain,  five  lines  below  the  last  account. 
Rule  the  loss  and  gain  accounts  as  directed  in  the  third  step,  observing  closely 
the  model.  Place  footings  between  the  addition  lines  and  the  double  closing 
lines  showing  the  accounts  in  balance.  Carry  the  inventories  down  in  black 
ink  under  the  date  Jan.  1,  1910.  Notice  there  is  no  inventory  to  carry  down 
in  Teams  account.     Post  the  Loss  &  Gain  entries. 

As  directed  in  step  four,  enter  the  difference  of  Loss  &  Gain  account, 
placing  in  explanatory  space  the  title  of  the  proprietor's  account;  rule  and 
foot  the  account. 

As  directed  in  the  fifth  step,  post  to  proprietor's  account  and  close  that 
account. 

The  sixth  step  requires  accounts  not  showing  loss  or  gain  to  be  balanced. 
There  is  but  one  such  account  in  this  set,  Cash.  Rule,  foot,  and  carry  balance 
down  as  in  model.     Be  particular  about  the  dates. 

Take  a  second  trial  balance  after  closing,  under  date  Jan.  1,  1910. 

Write  on  the  back  of  the  trial  balance  paper  the  answers  to  the  following 

QUESTIONS.  1.  What  kind  of  property  is  represented  by  Furniture  & 
Fixtures  account? 

2.  What  does  Teams  account  represent? 

3.  What  does  the  Expense  account  represent? 

4.  What  is  the  cash  value  of  an  account? 

5.  How  is  the  gain  of  an  account  found? 

6.  How  is  the  loss  of  an  account  found? 

7.  What  is  meant  by  the  term  Inventory? 

8.  How  is  an  account  showing  gain  or  loss  closed? 

9.  What  is  the  purpose  of  opening  the  Loss  &  Gain  account? 

10.  What  does  the  balance  of  the  proprietor's  account  show  after  receiv- 
ing the  net  gain  or  loss? 

11.  Why  are  original  entries  in  the  ledger  made  in  red  ink? 

12.  How  is  a  ledger  account  ruled  to  show  that  it  is  closed? 

13.  What  are  done  with  inventories  and  balances  of  accounts  after  the 
accounts  are  closed? 

14.  Under  what  date  is  it   customary  to   carry  down  the  proprietor's 
net  worth,  the  account  balances  and  the  inventories. 

15.  Give  the  six  steps  of  closing  a  ledger. 

DIRECTION.  Submit  your  work  for  inspection  as  instructed  in  pre- 
vious exercises. 

EXERCISE  VIII 

INFORMATION  #  44.  Purchase  or  sale  of  property  refers  to  one 
person  exchanging  value  with  another  person. 

#  45.  Property  is  purchased  or  sold  in  exchange  for  cash,  or  for  other 
property,  or  for  claims  against  others. 

i^  46.     The  usual  business  claims  against  others  are  notes  or  accounts. 

#  47.  Our  ledger  title  for  claims  held  against  others  in  form  of  notes 
is  Notes  Receivable. 

#  48.  Our  ledger  title  for  claims  not  in  writing  against  others  is  the 
name  of  the  person  against  whom  the  claim  is  held. 


26  PROGRESSIVE  BUSINESS  ACCOUNTING 

#  49.  Our  ledger  title  for  claims  in  the  form  of  notes  held  by  others 
against  us  is  Notes  Payable. 

#  50.  Our  ledger  title  for  the  claims  not  in  writing  in  favor  of  others 
is  the  name  of  the  person  who  has  the  claim  against  us. 

#  51.  Accounts  with  notes  and  with  persons,  like  the  cash  account,  are 
assumed  to  have  a  fixed  cash  value,  as  they  represent  an  actual  amount  in 
money  neither  more  nor  less  to  be  paid  or  received,  hence  they  are  not  expected 
to  show  losses  nor  gains.  For  this  reason  they  are  called  financial  accounts, 
as  opposed  to  the  accounts  representing  things  for  which  money  is  given  or 
received  called  commercial  accounts. 

#  52.  For  convenience  in  handling  accounts,  place  the  commercial 
account  first  in  a  ledger,  and  the  financial  account  in  a  second  division. 

The  cash  account  is  a  financial  account,  but  as  it  represents  actual  value  in  hand, 
it  is  placed  among  the  commercial  accounts.  In  a  business  requiring  comparatively 
many  cash  entries,  the  cash  account  is  placed  in  a  separate  cover  from  the  rest  of 
the  ledger  accounts. 

#  53.  When  closing  a  ledger,  the  financial  accounts  are  left  standing 
without  any  change  other  than  to  balance  them,  unless  their  values  have  been 
impaired. 

EXPLANATION.  The  following  exercise  will  as  briefly  as  possible  give 
the  opening,  journalizing,  posting,  and  closing  of  business  transactions  involv- 
ing both  commercial  and  financial  accounts. 

DIRECTIONS.  Open  a  ledger  of  two  pages,  placing  on  the  first  page 
the  titles,  J.  B.  Emery,  Proprietor,  6  lines.  Cash  8  lines.  Merchandise  8  lines, 
Furniture  &  Fixtures  5  lines.  Expense  5  lines.  On  page  2,  Notes  Receivable 
5  lines,  Notes  Payable  5  lines.  Below  the  Notes  Payable  account  enter  the 
personal  accounts  as  they  are  opened,  allowing  5  lines  to  each.  Use  a  sheet 
of  journal  paper,  first  page  for  journal  entries  and  reverse  page  for  trial 
balance  and  answers. 

TRANSACTIONS.  June  1,  1909.  J.  B.  Emery  began  business,  investing 
cash  $3,000  and  one  note  against  D.  Minkler  for  $1,000. 

Debit  Cash,  and  Notes  Receivable.  Be  sure  to  give  the  name  of  the  payer  of  the 
note,  as  this  name  is  to  be  carried  to  the  explanatory  space  in  the  ledger  when  the 
posting  is  done. 

Paid  to  Geo.  Coleman,  store  rent  to  July  1,  $40. 

2.  Bought  of  Grant  &  Williams,  on  account,  Mdse.  per  their  invoice 
dated  June  1,  $1,850.12. 

Credit  Grant  &  Williams'  account,  because  that  title  represents  a  claim  against 
us  given  to  others  in  exchange  for  the  Mdse.  received. 

3.  Bought  of  P.  Keenan  &  Co.,  furniture  and  fixtures  for  store  use,  per 
their  bill  of  June  2,  amounting  to  $360.49,  giving  our  30-day  note  in  payment. 

Credit  Notes  Payable,  because  that  account  represents  a  written  claim  given  in 
exchange  for  the  property. 

4.  Sold  0.  0.  Wolcott,  on  account,  a  bill  of  goods  amounting  to  $69.42. 
Debit  O.  O.  Wolcott,  because  that  title  represents  a  claim  received  in  exchange  for 

the  property. 

6.  Sold  Thomas  Stone  for  his  10-day  note,  bill  of  goods  amounting  to 
.$211.64. 

Debit  Notes  Receivable,  because  that  title  represents  written  claims  received. 

7.  Paid  Grant  &  Williams  on  account,  $500  cash. 

Debit  G.  &  W.,  because  this  is  the  title  of  the  claim  receiving  the  cash. 

8.  Received  cash  of  D.  Minkler,  $1,000,  in  payment  of  his  note. 
Credit  Notes  Receivable,  the  giving  account. 


PROGRESSIVE  BUSINESS  ACCOUNTING  27 

10.     Sold  Geo.  Taylor,  on  account,  Mdse.  per  bill,  $650.91. 

10.     Bought  of  Grant  &  AVilliams,  Mdse.  per  invoice,  on  account,  $729.40. 

30.  Bought  of  Gwinnett,  Lyman  &  Co.,  for  our  60-day  note,  Mdse.  per 
bill,  $2,640.30. 

DIRECTIONS.  After  the  journal  is  correctly  completed,  post  all  ac- 
counts, remembering  to  open  accounts  with  Grant  &  Williams,  0.  0.  Wolcott, 
and  Geo.  Taylor. 

After  posting,  take  a  trial  balance  on  reverse  side  of  journal  paper, 
dating  the  trial  balance  June  30,  1909 ;  then  close  the  ledger. 

Enter  inventories  as  follows:  Merchandise,  $4,325;  Furniture  &  Fix- 
tures, $360.49.    The  financial  accounts  are  considered  worth  face. 

Merchandise  and  Expense  are  the  only  accounts  showing  losses  or  gains. 
Close  them  into  Loss  &  Gain  account,  and  balance  Cash,  Notes  Receivable, 
and  Notes  Payable.  Rule  only  double  closing  lines  when  the  columns  do  not 
require  totals  to  show  equality  in  closing. 

Post  the  inventories  to  the  debit  of  the  accounts,  under  date  July  1. 
Take  a  trial  balance,  July  1,  using  the  same  balances  in  the  financial  accounts 
on  page  2  as  in  previous  trial  balance. 

QUESTIONS.     1.     In  what  three  ways  is  property  sold? 

2.  In  what  forms  are  the  two  usual  business  claims  against  others? 

3.  What  is  our  ledger  title  for  notes  in  our  favor?    For  notes  against  us? 

4.  What  is  the  ledger  title  for  claims  against  persons  on  open  account? 

5.  What  are  financial  accounts? 

6.  What  are  commercial  accounts? 

7.  How  are  financial  accounts  treated  when  closing  the  ledger? 

8.  Why  do  we  debit  the  name  of  the  person  who  buys  of  us  on  account  ? 

9.  Why  do  we  debit  Notes  Receivable  when  a  person  buys  of  us  for 
a  note? 

10.  What  are  included  under  the  title  of  Notes  Payable  ?  ^ 
DIRECTIONS.     Having  completed  the  work,  write  the  heading  at  top 

of  the  two  papers,  placing  journal  above,   ledger  below;  pin   carefully  as 
before  and  pass  in  for  inspection. 

EXERCISE  IX 

INFORMATION  #  54.  Labor  is  a  valuable  thing  which  may  be  ex- 
changed for  cash.  A  person's  labor  value  is  measured  commercially  by  the 
amount  of  money  he  can  earn  in  one  year. 

#  55.  Interest  or  the  use  of  money  is  a  valuable  thing  measured  by  the 
amount  of  money  that  one  dollar  will  earn  in  one  year. 

#  56.  Labor  account  and  Interest  account  enter  largely  into  many  kinds 
of  business. 

4^  57.  Persons  who  keep  books  to  show  the  general  results  of  their  labor 
or  business  should  make  a  monthly  journal  entry  which  shows  the  result  of 
a  month's  transactions  in  labor,  cash,  etc.,  and  should  close  the  books  once 
each  year. 

:^  58.  The  lousiness  year  does  not  necessarily  begin  on  January  1.  It 
may  begin  on  the  month  which  makes  the  starting  date  most  convenient  for 
the  work  in  hand. 

#  59.  A  person's  small  daily  receipts  and  disbursements  of  cash  should 
be  kept  in  a  meorandum  book  from  which  the  items  are  to  be  totalled  and 
charged  to  the  appropriate  accounts  at  the  end  of  the  month. 


28 


PROGRESSIVE  BUSINESS  ACCOUNTING 


EXPLANATION.  In  the  following  exercise  the  student  will  keep  the 
books  of  a  capable  young  person,  showing  his  accounts  with  labor  and  his 
receipts  and  disbursements  of  cash  during  the  year  in  which  he  takes  the 
course  in  a  commercial  college.  Accounts  are  to  be  kept  with  Proprietor, 
Cash,  School  Expense,  Living  Expense,  Labor,  Interest  and  Notes  Payable. 
The  accounts  here  kept  in  a  small  way  are  like  in  nature  to  accounts  of 
similar  titles  if  kept  in  a  large  business. 

DIRECTIONS.  Use  a  folded  sheet  of  journal  paper ;  page  it  1,  2,  3,  and 
4.    And  a  folded  sheet  of  ledger  paper,  paging  it  1,  2,  3,  and  4. 

Open  accounts  in  the  ledger,  allowing  John  Manning,  Proprietor,  10 
lines,  Cash  the  remainder  of  page  1 ;  School  Expense  15  lines  from  top  of 
page  2,  and  Living  Expense  the  remainder  of  page  2.  Labor  15  lines  from 
top  of  page  3 ;  give  Interest  and  Notes  Payable  equally  the  remaining  space 
on  page  3.     Post  the  entries  monthly. 

TRANSACTIONS.  On  Sept.  1,  1909,  John  Manning  begins  a  year's 
business,  the  purpose  of  which  is  to  devote  his  time  in  such  a  way  as  to  make 
the  most  use  of  it.  He  is  a  young  man  who  is  able  to  earn  $6  per  week  or 
$312  per  year.  "We  will  consider  his  coming  year's  work  worth  $300.  He 
has  on  hand  cash,  $100.  He  invests  the  cash  and  the  year's  work.  Make  an 
opening  journal  entry,  debiting  cash  $100,  Labor  $300,  and  crediting  John 
Manning,  Proprietor,  $400. 

Remark:  It  will  be  noticed  that  the  proprietor  gives  to  the  coming  year's  work 
a  cash  value  based  on  what  he  could  earn  as  shown  by  the  previous  year.  If  he  is 
able  to  get  more  than  that  amount  from  his  labor,  the  Labor  account  at  the  close  of 
the  year  will  show  a  gain  over  expectation.  If  he  gets  less  than  that  amount,  the 
result  will  show  a  loss.  He  should  so  direct  his  labor  as  to  make  it  more  valuable 
than  it  was  the  year  before. 


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He  buys  a  nine  months'  scholarship  in  a  business  college  for  $90, 
and  text  books  and  stationery  for  $10,  paying  cash.  (Debit  School  Expense, 
because  that  part  of  the  business  receives  value.) 

Borrowed  of  his  father,  Ezra  Manning,  $150,  on  a  note  payable  two 
years  from  date  with  interest  at  6  per  cent,  payable  semi-annually. 

Paid  Mrs.  Close,  cash  for  board  and  room  one  month,  $13.  (Debit  Living 
Expense.) 

Sept.  30.  The  Cash  memorandum  book  shows  that  during  the  month 
cash  was  paid  for  clothing,  for  room  and  board  to  Jan.  1,  1910;  this  does 
not  include  the  first  month's  board;  for  entertainments,  for  society,  dues, 
etc.,  $55,45,  to  be  charged  to  Living  Expense.  There  was  paid  for  a  diction- 
ary and  a  penman's  paper,  $1.50.  Charge  to  School  Expense.  During  tht» 
month  no  time  was  lost.  One  month's  labor,  valued  at  $25,  was  therefore 
given  to  School  Expense.  The  month's  entries  of  debits  and  credits  are  to 
be  grouped  in  one  entry,  thus : 


PROGRESSIVE  BUSINESS  ACCOUNTING 


29 


Note  that  the  total  debits  equal  the  total  credits.  As  this  completes  the 
entries  of  the  month,  post  to  the  ledger  accounts. 

Oct.  31.  The  memo,  book  shows  paid  during  the  month  of  October  for 
Living  $5.30,  for  School  Expense  $2.  One  week's  work  in  school  was  lost, 
so  that  $20  will  be  considered  the  amount  to  pass  from  Labor  account  to 
the  School  Expense  account.  (Make  a  journal  entry  as  in  September.  Post 
as  before.) 

Nov.  30.  The  memo,  of  cash  payments  this  month  shows  Living  Expense 
to  be  $4.20,  and  School  Expense  $.30.  A  full  month's  labor  was  passed  to 
School  Expense  at  $25. 

Dec.  31.  Cash  payments  for  month  per  memo,  are :  Living  Expense 
$33.90,  School  Expense  $27.80,  which  includes  $22.50  passed  from  Labor 
account  as  two  days'  school  work  was  lost  on  account  of  sickness.  (Journalize 
and  post.)  Pencil  foot  the  cash  account  to  show  amount  now  remaining. 
Is  the  amount  there  shown  $29.05  ?    If  so,  the  account  is  correct. 

As  your  business  year  closes  Aug.  31,  1910,  instead  of  Dec.  31,  1909,  place 
the  year  date  1910  in  the  date  column  of  all  accounts  under  the  last  date. 
Place  year  under  the  blue  line  in  about  the  same  way  a  pencil  footing  is 
placed,  so  as  not  to  interfere  with  the  entry  on  the  next  line. 

Jan.  31,  1910.  The  cash  payments  for  the  month,  including  three  months' 
board,  as  per  memo,  book,  are:  Living  Expense  $40.16,  School  Expense  $3.80. 
One  full  month's  labor  is  given  to  School  Expense  $25.  On  Jan.  3,  borrowed 
cash  $40  of  father,  Ezra  Manning,  giving  a  demand  note  for  the  amount.- 
During  the  month  there  was  received  cash,  per  memo.,  for  work  done  on 
Saturdays,  $5.50.     The  correct  entry  is  as  shown  below. 


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Feb.  28.  Cash  payments  for  February,  per  memo,  book,  are  Living 
Expense  $8.50,  School  Expense  $.80,  one-half  year's  interest  on  father's 
note  $4.50.  Labor  passed  to  School  Expense  $25.  Cash  was  earned  by  extra 
labor  during  the  month  $8.     (Journalize  as  in  model.) 


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30  PROGRESSIVE  BUSINESS  ACCOUNTING 

Pencil  foot  the  cash  account  to  see  the  amount  of  cash  on  hand.  If  $24.79 
is  shown,  the  amount  is  correct. 

March  31.  The  cash  memo,  shows  paid  for  Living  Expense  $3.13,  School 
Expense  $.80,  Labor  passed  to  School  Expense  $25.  Cash  was  earned  during 
the  month  by  extra  labor,  $7.50. 

April  30.  The  cash  memo,  shows  paid  for  Living  Expense  $15.20,  School 
$.20.  Passed  to  School  Expense  from  Labor  account,  $25.  Earned  during 
the  month  by  extra  labor  $8.    Is  the  cash  on  hand  shown  to  be  $20.96? 

May  31.  Living  Expenses  in  cash  for  month  $15.50,  School  Expenses 
$30.50,  of  which  $5.50  is  credited  to  Cash  and  $25  to  Labor.-  Earned  during 
the  month,  $7.25  in  cash. 

The  nine  months'  course  in  college  is  now  completed.  Compare  cash 
receipts  with  cash  payments  to  see  amount  on  hand.  If  correct,  the  books 
should  show  a  balance  of  $7.21. 

June  6.  Began  work  for  the  Drew  Manufacturing  Co.,  as  assistant  book- 
keeper, receiving  a  temporary  salary  of  $9  per  week.  (Copy  this  memo,  in 
the  explanatory  space  of  the  journal,  entering  the  date  but  no  titles  or 
amounts.) 

June  30.  From  the  memo,  book  appears  the  following  cash  and  labor 
items  for  the  month :  Paid  for  sundry  items  to  be  charged  to  Living  Expense, 
$21.  Received  month's  salary  in  cash,  $27.  (Debit  Living  Expense  and 
Cash;  credit  Labor  and  Cash.) 

July  31.     Received  July  salary  in  casli,  $38. 

Paid  during  the  month,  cash  for  Living  Expense,  $19.50. 

Aug.  31.     Received  August  salary  in  cash,  $40. 

Paid  for  living  expenses  during  the  month,  $20.25,  and  for  the  demand 
note  to  Ezra  Manning,  $40;  also  interest  on  the  demand  note,  $1.59,  and  six 
months'  interest  on  the  $150  note,  $4.50,  making  the  interest  in  all,  $6.09. 
After  all  entries  are  posted,  take  a  trial  balance  on  an  extra  half  sheet  of 
the  journal  paper. 

The  Drew  Mfg.  Co.  have  offered  John  Manning  a  salary  of  $60  per  month 
for  the  ensuing  year,  which  he  has  accepted.     (Make  memo,  in  journal.) 

Preparatory  to  closing  ledger,  account  of  cash  on  hand  is  made  showing 
$5.37.  The  salary  earning  capacity  for  the  ensuing  year  is  $720,  to  which 
an  inventory  value  of  $700  is  given.  Enter  this  inventory  to  the  credit  of 
Labor  account,  and  carry  the  gains  or  losses  of  School  Expense,  Living 
Expense,  Labor,  and  Interest  through  Loss  and  Gain  account  to  the  pro- 
prietor's account  and  close  that  account.  Close  the  proprietor's  account, 
carrying  down  the  net  worth. 

Take  a  trial  balance. 

On  the  reverse  side  of  the  trial  balance,  write  answers  to 

QUESTIONS.     1.     Has  labor  a  cash  value  in  business? 

2.  How  is  the  value  of  labor  measured? 

3.  How  is  the  use  of  money  valued? 

4.  How  often  should  the  earnings  of  labor  and  the  personal  expenses 
be  entered  in  the  journal? 

5.  Does  a  business  year  always  begin  on  January  1? 

6.  How  often  should  the  ledger  of  one's  personal  business  be  closed? 
DIRECTION.     Submit  your  work  for  examination. 


PROGRESSIVE  BUSINESS  ACCOUNTING  31 

EXERCISE  X 

INFORMATION  #  60.  The  common  transactions  in  a  mercantile  busi- 
ness are  of  three  kinds:  (1)  the  purchase  of  merchandise,  (2)  the  sale  of 
merchandise,  (3)  the  handling  of  cash. 

#G1.  In  addition  to  the  above  kinds  of  transactions,  there  are  a  number 
of  unclassified  transactions. 

#62.  A  standard  system  of  bookkeeping  divides  the  original  entries 
among  four  books,  viz. :  the  Purchase  Book,  the  Sales  Book,  the  Cash  Book  and 
the  Journal. 

#63.  The  Purchase  Book  contains  the  entries  for  the  purchases  of  mer- 
chandise. 

#64:.     The  Sales  Book  contains  the  entries  for  all  sales  of  merchandise. 

#65.  The  Cash  Book  contaihs  the  entries  for  all  receipts  or  payments 
of  cash. 

#66.  The  Journal  contains  all  entries  not  provided  for  in  the  other 
three  books. 

#61.  By  dividing  the  original  entries  among  four  books,  the  amount  of 
posting  can  be  reduced,  the  entries  can  be  more  conveniently  made,  and  the 
records  of  past  transactions  can  be  found  more  readily. 

#68.  In  a  mercantile  or  buying  and  selling  business,  the  accounts  with 
persons  require  the  most  careful  use  of  explanatory  columns  in  the  ledger, 
because  the  facts  of  an  account  are  repeatedly  referred  to  when  paying  or 
collecting  bills. 

#69.  The  ledger  should  be  divided  into  three  parts:  (1)  general  ac- 
counts, (2)  purchase  accounts,  (3)  sales  accounts.  When  a  business  becomes 
large  enough,  these  three  parts  are  placed  in  three  separate  ledgers. 

#10.  All  purchases  of  merchandise  are  footed  in  the  purchase  book  and 
the  total  is  posted  to  the  debit  of  the  Merchandise  account  on  the  last  day  of 
the  month. 

#11.  The  cash  book  is  so  arranged  that  the  debit  and  credit  footings 
are  the  same  as  they  would  be  if  posted  to  the  ledger,  hence  no  cash  account 
is  required  in  the  ledger. 

EXPLANATION.  In  this  exercise  the  student  will  make  illustrative 
entries  in  the  four  books  of  original  entry  above  outlined,  will  post  same 
and  will  take  a  trial  balance.  Keep  clearly  in  mind  that  every  transaction 
involves  a  debit  and  a  credit..  Also  keep  inniind  that  where  there  are  many 
debits  to  Merchandise  in  the  purchase  book,  or  many  credits  to  Merchandise 
in  the  sales  book,  much  time  and  labor  can  be  saved  by  posting  all  of  the 
entries  in  one  total  rather  than  by  posting  one  at  a  time. 

DIRECTIONS.  Take  one  folded  sheet  and  one  half  sheet  of  journal 
paper.  Page  the  folded  sheet  1,  2,  3,  and  4,  and  the  half  sheet  page  1.  Use 
page  1  of  the  folded  sheet  for  the  purchase  book,  pages  2  and  3  for  a  cash 
book,  and  page  4  for  a  sales  book.  Use  page  1  of  the  half  sheet  for  the 
journal  and  head  them  as  shown  in  model. 

Take  a  folded  sheet  of  ledger  paper  and  page  it  1,  2,  3,  and  4.  Use  pagt-s 
1  and  2  for  general  accounts,  3  for  purchase  accounts,  and  4  for  sales  accounts. 
"Write  these  headings  on  the  ledger  as  on  the  other  books.  Divide  the  ledger 
space  equally  among  the  six  accounts  on  pages  1  and  2.  Clayton  Smith, 
Propr.,  Merchandise,  Furniture  &  Fixtures,  Expense,  Notes  Payable,  Notes 


32 


PROGRESSIVE  BUSINESS   ACCOUNTING 


Keceivable.  Space  the  personal  accounts  one-third  page  each  as  required. 
It  is  important  that  the  student  follow  all  instructions  as  outlined  in  the 
notes  following  the  transactions. 


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TRANSACTIONS.  July  1,  1909.  Clayton  Smith  began  business  as  a 
dealer  in  galvanized  grain  bins  used  by  farmers  for  storing  wheat,  oats,  barley, 
etc.     He  invested  cash  $500. 

A  memo,  of  the  opening  should  be  made  in  the  journal.  (See  model.)  The  cash 
invested  should  be  entered  in  the  debit  side  of  the  cash  book.  This  entry  has  the 
effect  of  debiting  Cash  because  the  cash  book  is  the  cash  account.  The  account  of 
Clayton  Smith,  the  proprietor,  is  credited  from  the  cash  book.  Notice  that  there  is 
space  in  the  cash  book  for  title  to  be  posted,  and  for  explanation.  After  making  the 
entry  debiting  Cash,  post  from  debit  side  of  cash  book  to  credit  side  of  proprietor's 
account.  In  the  ledger  folio  space  write  "C2"  to  show  that  the  posting  was  taken 
from  the  cash  book  page  2.  After  posting,  place  the  ledger  page  in  the  folio  column 
of  the  cash  book. 

Paid  cash  for  rent  of  ware  house  one  month  $15. 

This  should  be  entered  in  the  credit  side  of  the  cash  book,  thus  crediting  the 
Cash  account.  The  debit  title,  Expense,  is  written  in  the  title  column  and  the 
explanation  follows.  (See  model.)  After  entry,  post  at  once  to  the  debit  of  Expense. 
Post  mark  in  cash  book.    What  account  is  debited?    What  account  is  credited? 

Bought  an  office  desk  and  chairs  for  cash  $12.  (Enter  in  cash  book  an^ 
post  to  Furniture  &  Fixtures.) 

Purchase  of  property  other  than  merchandise  cannot  be  entered  in  the  purchase 
book  as  the  total  purchases  charge  to  Mdse. 

Paid  for  a  desk  room  in  an  office  one  month  $6. 


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PROGRESSIVE  BUSINESS   ACCOUNTING 


33 


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Paid  for  lumber  for  shelving  in  ware  house,  $18.50,  (Charge  Furniture  & 
Fixtures.) 

Sent  an  order  to  Waterloo  Metal  Culvert  Co.,  for  a  1000  bu.  galvanized 
grain  bin  enclosing  in  the  order  cash  per  draft  for  $54,  to  apply  on  the 
purchase  price. 

This  purchase  is  not  made  until  the  article  ordered  is  sent.  The  only  entry 
required  is  the  payment  in  the  cash  book.  Debit  Waterloo  Metal  Culvert  Co.  Open 
this  account  at  the  top  of  page  3  of  ledger. 

Pencil  foot  the  cash  book  to  show  the  amount  on  hand.  If  the  amount 
shown  is  $394.50  the  work  is  correct. 

July  5.  Received  from  Waterloo  Metal  Culvert  Co.,  by  freight,  1  grain 
bin,  1,000  bu.,  billed  at  $108,  account  10  days. 

This  purchase  of  merchandise  should  be  entered  in  the  purchase  book  as  shown 
in   model  on  page  34. 

After  entry  is  made,  post  the  amount  to  the  credit  of  the  firm  from  whom  pur- 
chased. As  10  days'  time  of  payment  is  allowed,  write  "acct.  10  da."  in  the  explanatory 
space  of  ledger.  After  posting,  be  sure  to  post  mark  the  folio  column  of  the  purchase 
book. 

July  10.  Paid  for  livery  hire  in  soliciting  orders  for  grain  bins,  $12. 
(Charge  Expense.) 


PROGRESSIVE  BUSINESS  ACCOUNTING 


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@     $108 
@     $120 
@     $132 
to  pay  balance  due  on  bill 


July  12.  Received  invoice  from  Waterloo  Metal  Culvert  Co.,  on  30  days 
account  consisting  of 

6  metal  grain  bins  1000  bu. 
4       ''  "       ''     1250  bu. 

1       ''  ''       "     1500  bu. 

July  14.     Sent  cash  to  Waterloo  M.  C.  Co. 
of  July  5,  $54. 

Enter  in  cash  book  as  before  and  post  to  debit  of  Waterloo  Metal  Culvert  Co. 
Observe  that  the  two  debits  of  $54  each  equal  the  one  credit  of  $108.  This  shows  that 
the  bill  is  paid.  When  a  bill  is  paid  make  X  mark  opposite  the  credit  and  the  balancing 
debit  amounts  to  show  that  settlement  of  that  part  has  been  made.     (See  model.) 

July  15.     Sold  AVilliam  Floyd  1  grain  bin,  1000  bu.,  on  account,  $135. 

Enter  in  sales  book  as  shown  in  model.  Open  account  with  William  Floyd  at  top 
of  page  4  of  ledger.     Enter  ledger  page  in  sales  book  after  posting. 

Sold  Frank  Lightfoot,  on  account,  3  grain  bins,  1250  bu.,  @  $150,  1  grain 
bin,  1,500  bu.,  @  $165.     (Open  account  page  4,  one-third  down  the  page.) 

Received  of  Frank  Lightfoot,  cash  to  apply  on  above  purchase,  $350. 

Enter  in  the  debit  side  of  cash  book  as  in  model  and  post  to  the  credit  of  Frank 
Lightfoot's  account. 

July  16.  Bought  of  Manning,  Dale  &  Co.,  2  metal  grain  bins,  1,200  '.u., 
@  $112.50;  2  metal  grain  bins,  800  bu.,  @  $90.00,  on  account. 

Enter  in  purchase  book  and  open  account  as  before.  Remember  that  purchase 
accounts  are  on  page  3  of  ledger. 

Paid  Waterloo  Metal  Culvert  Co.,  on  account,  $500. 

Enter  in  cash  book;  post  to  ledger. 

Paid  xVTanning,  Dale  &  Co.,  cash  on  account,  $50. 

July  17.  Sold  George  Taylor,  on  his  30-day  note,  2  M.  D.  &  Co.  800  Ini. 
bins  @  $112.50. 

Enter  in  sales  book  as  in  model.    Post  to  Notes  Receivable  account  in  ledger. 

Sold  George  Gerry  on  account  1  M.  D.  &  Co.  1200  bu.  bin  @  $140. 

Open  account  on  page  4. 


PROGRESSIVE  BUSINESS  ACCOUNTING 


35 


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Sold  Edward  Read  for  his  6  months'  note,  3  AV.  M.  C.  &  Co.  1000  bu.  bins 
@  $135,  1  M.  D.  &  Co.  1200  bu.  bin  @  $140. 
Enter  and  post  to  Notes  Receivable. 
July  22.     Sent  AVaterloo  M.  C.  Co.  a  60-day  note  for  $760  to  balance 

their  account. 

A  journal  entry  is  required.  Debit  W.  M.  C.  Co.;  credit  Notes  Payable.  See  model 
entry.    When  posting,  use  X  marks. 

Received  cash  of  William  Floyd  in  full  of  account,  $135, 

Place  X  marks  before  the  amounts  to  show  payment. 

July  24.  Sold  William  Floyd  on  account  2  AV.  M.  C.  Co.  1000  bu.  bins 
@  $135,  1  W.  M.  C.  Co.  1250  bu.  bin  @  $150. 

Bought  of  Waterloo  Metal  Culvert  Co.,  giving  in  payment  a  90-day  note, 
5  W.  M.  C.  Co.  1000  bu.  bins  @  $108,  1  W.  M.  C.  Co.  750  bu.  bin  @  $100. 

Post  to  credit  of  Notes  Payable. 

July  31.     Paid  for  livery  hire  $18,  cash.     (Charge  Expense.) 

DIRECTIONS.  As  this  is  the  close  of  the  month,  totals  are  to  be  posted 
and  a  trial  balance  taken.  Rule  an  addition  line  at  the  foot  of  the  amounts 
in  the  purchase  book,  foot  and  double  rule  as  shown  in  model.  All  of  the 
items  in  this  book  have  been  posted  to  the  credit  of  the  firms  from  whom  the 
purchases  were  made.  The  total  is  to  be  posted  to  the  debit  of  the  merchandise 
account.    Indicate  this  posting  and  post  mark  as  there  shown. 

Foot,  rule,  and  post  total  of  sales  book  to  the  credit  of  the  Merchandise 
account.  Pencil  foot  the  debit  and  credit  columns  of  the  cash  book,  and 
carry  the  pencil  footings  to  the  second  line.  The  total  receipts  less  the 
footings  to  the  second  line  as  shown  in  model.     The  total  receipts  less  the 


36  PROGRESSIVE  BUSINESS   ACCOUNTING 

total  payments,  shows  a  cash  balance  of  $245.50  remaining.  Enter  this  bal- 
ance in  the  credit  side  in  red  ink  and  rule  addition  lines  on  the  final  debit 
and  credit  column.  Be  sure  to  rule  the  addition  lines  at  equal  distances 
from  the  top,,  not  one  above  the  other.  After  ruling,  carry  the  balance  below 
the  ruled  space  as  in  model. 

Take  a  trial  balance,  entering  the  cash  balance  first,  and  the  ledger 
accounts  after.    This  is  to  be  placed  below  the  entries  on  page  1  of  the  journal. 

Close  the  ledger;  the  financial  accounts  following  expense  need  not  be 
balanced.    The  inventories  are: 

Mdse.  6—1000  bu.  W.  M.  C.  Co.  bins  @  $108,  1—750  bu.  W.  M.  C.  Co. 
bin  @  $100.  Furniture  &  Fixtures,  valued  at  $20.  Place  the  Loss  &  Gain 
account  at  foot  of  page  2.  Take  a  trial  balance  after  closing  and  copy  it 
below  the  trial  balance  already  taken. 

On  the  back  of  the  journal  sheet  write  answers  to  the  following 

QUESTIONS.  1.  What  are  the  three  common  kinds  of  transactions 
in  a  mercantile  business? 

2.  Are  there  occasionally  other  kinds  of  transactions? 

3.  What  four  books  of  original  entry  may  be  used? 

4.  What  entries  does  the  purchase  book  contain? 

5.  What  entries  does  the  sales  book  contain? 
G.     What  entries  does  the  cash  book  contain? 

7.  What  entries  does  the  journal  contain? 

8.  By  dividing  the  original  entries  among  four  books,  what  three 
advantages  are  secured? 

9.  What  can  you  say  of  the  use  of  the  explanatory  column  of  the 
ledger  in  personal  accounts. 

10.  The  ledger  is  divided  into  what  three  parts? 

11.  When  a  purchase  book  is  used,  how  is  Mdse.  debit  posted? 

12.  When  a  sales  book  is  used,  how  is  the  Mdse.  credit  posted? 

13.  Why  are  the  cash  book  totals  not  posted  to  the  cash  account  in  the 
ledger  ? 

14.  How  is  the  cash  book  balanced? 

15.  What  two  books  must  be  referred  to  in  taking  a  trial  balance? 
DIRECTIONS.     After  answering  the  above  questions,  pin  your  work  as 

before  directed,  purchase  book  at  top,  then  ledger,  then  journal,  with  ques- 
tions at  back,  and  submit  for  inspection. 


"  "^vjvi^i 


PROGRESSIVE  BUSINESS   ACCOUNTING  37 

Set  A 

BUSINESS  PRACTICE 

TO  THE  STUDENT : 

If  you  have  mastered  the  principles  presented  in  the  preceding  ten  exer- 
cises, you  will  find  the  following  work  not  only  comparg-tively  easy,  but  very 
profitable  as  well.  At  this  point,  you  are  to  begin  business  transactions  in 
your  own  name.  You  will  make  business  papers,  handle  cash,  buy  and  sell, 
collect  accounts  and  in  other  ways  conduct  your  business  as  a  business  man. 
If  you  are  independent  in  action,  if  you  use  your  own  mind  to  think  out 
your  problems,  if  you  are  industrious,  patient  and  thoughtful,  you  will 
develop  into  one  of  the  most  valued  members  of  society — a  well-poised 
business  man.  Kindly  remember  that  however  important  a  person's  work, 
he  cannot  afford  to  slight  the  details,  for  the  little  things  like  small  coins 
will  eventually  amount  to  important  values.  Never  avoid  any  sensible 
problem,  however  hard.  Grind  the  rough  kernels  of  the  business  world  into 
the  finest  flour.  Remember  that  of  the  thousands  that  have  a  smattering  of 
bookkeeping  knowledge,  very  few  are  masters  of  accounting.  The  few  that 
are  masters  can  command  business  success  at  almost  any  time,  almost  any- 
where. 

EXPLANATION.  You  are  to  begin  a  jobbing  business  which  you  will 
own  as  sole  proprietor.  You  will  be  instructed,  as  each  transaction  arises, 
how  to  conduct  it  in  the  proper  way,  how  to  prepare  the  proper  papers,  etc. 
You  will  begin  business  with  a  capital  in  cash.  This  you  will  take  care  of 
exactly  as  a  good  business  man  should.  The  work  is  divided  into  periods 
for  the  purpose  of  measuring  your  progress,  but  these  periods  need  not  inter- 
fere with  your  always  using  the  current  date  for  your  transactions.  Keep 
your  desk,  books,  papers,  etc.,  in  such  a  condition  that  any  matter  of  past 
business  can  be  referred  to  promptly  when  desired. 

DIRECTIONS.  Have  journal,  cash  book,  purchase  book,  sales  book, 
and  ledger  ready  for  use. 

The  Journal,  Cash,  and  Trial  Balance  will  be  a  book  of  twelve  pages. 
Use  pages  1,  2,  and  3  for  Journal;  4,  5,  6,  and  7  for  Cash  Book,  and  pages  8, 
9,  10  and  11  for  Trial  Balances  and  Statements. 

The  Purchase  Book,  Sales  Book  and  Inventory  Book  will  be  in  one  cover. 
Use  twelve  pages,  1  and  2  for  the  Purchase  Book,  3  to  10  for  the  Sales  Book, 
and  11  and  12  for  Inventories. 

The  Ledger  will  require  four  folded  sheets  with  the  index  at  the  front. 
Page  it  1  to  14,  beginning  with  the  sheet  following  the  index.  Allow  pages 
1  to  6  for  general  accounts,  7  to  9  for  purchase  accounts,  and  10  to  14  for 
sales  accounts. 

INFORMATION  #  80.  In  a  ledger  of  any  size  it  is  necessary  to  transfer 
all  of  the  titles  to  an  alphabetical  list  called  an  index.  (See  model.)  The 
titles  are  entered  as  written  in  the  ledger  with  the  page  on  which  the  account 
may  be  found  following,  so  that  the  page  on  which  any  desired  account  is 
kept  may  be  promptly  found.  In  the  case  of  the  names  of  persons  or  firms, 
the  surname  is  placed  first,  followed  by  the  initials  or  given  name.  A  book- 
keeper should  form  the  habit  of  indexing  accounts  as  soon  as  entered. 


38 


PROGRESSIVE   BUSINESS   ACCOUNTING 

INDEX. 


1  &  J 


R 


(^^^^^a^^- 


(^^^V-^-^->^if..^£^-.^^^:t^-/^ 


T^e^^'>-^^t.-?^-fs£w<^  1>?r^  (^ 


L2. 


.^:C/^^^::2^rf^<^--<-g^'^-^i^  -  7  Q^U■■7^^■<c^.--^~^Si.^e-^.^<-<f~(Z. 


^'^X&O-Z'O^i—^-.^'fi^ 


A/ 


^ 


^f--^^  K- 


^^r^^^K^^...^.^ 


/  O 


^^^^^.^^ 


LJ. 


^X^^-<^^^ 


ZZ 


(^fU^^-^-i^^. '^)^V.a^    S^. 


LI 


M 


'yPt^eZ,--^^<n^-e.^>^ .  J^-i^-i^'ny 


'yh'Z^e^^l.-<i'^-:gi^*^-*6-^^'<i^ 


^ 


^^ay 


Z^ 


5^?Z-rfi,^V. 


>V^ 


^^^.^^  y-^-. 


IjZ 


^^^g<^C-.^U^..g^»^  M^r^.  .e^^:n^c^  / 


<~-pC-^£-'?1.-»,^^ 


^ 


^%,it-?£v -f^g;^-.^^:^..^^^,.^^ 


/^ 


o 


w 


CZ'C^^^^-.-'yz-^^iti^cA^^  I, 


X  &  Y 


PROGRESSIVE  BUSINESS  ACCOUNTING 


39 


DIRECTIONS.  Place  the  following  general  accounts  in  your  ledger  and 
index  them  when  placed:  Student's  name,  Proprietor  1,  Merchandise  and 
Furniture  &  Fixtures  2  (each  one-half  page),  Expense  3,  Interest  &  Dis- 
count and  Merchandise  Discount  4  (each  one-half  page),  Notes  Payable  and 
Notes  Receivable  6  (each  one-half  page). 

When  purchase  or  sales  accounts  are  opened,  allow  each  one-third  page, 
beginning  with  the  first  page  of  the  purchase  or  sales  divisions. 

EXPLANATION.  Your  business  in  the  following  transactions  is  that 
of  Jobber,  a  person  who  buys  from  manufacturers  or  importers  and  sells  to 
dealers  certain  commodities  in  quantities.  Your  location  is  that  of  an  im- 
portant trade  center  and  your  dealings  will  be  with  city  customers. 

A  1.     Begin  business  with  a  cash  capital  of  $5,000. 

DIRECTIONS.  The  currency  for  opening  is  at  the  desk  of  the  teacher, 
who  has  it  in  charge  for  you.  Count  the  money  carefully  and  if  correct, 
make  the  opening  entry.  Use  the  local  address  and  the  current  date.  Make 
memo,  of  the  opening  in  the  journal  (see  form  in  Ex.  X).  Make  entry  for 
posting  in  cash  book  as  in  Ex.  X,  and  post  to  the  credit  of  the  proprietor's 
ledger  account.  Do  not  forget  to  post  mark.  Place  the  currency  in  your 
cash  drawer.  Do  not  proceed  until  you  are  sure  that  you  actually  have  the 
right  amount  of  cash,  and  that  the  journal,  cash  book,  and  ledger  records 
are  correct. 

INFORMATION  #  81.  It  is  the  principal  business  of  a  bank  to  keep 
on  deposit  the  cash  of  business  men  and  to  lend  them  money  when  they 
require  it.  Business  men  usually  deposit  the  greater  part  of  their  cash  on 
hand,  so  as  to  avoid  the  risk  of  carrying  any  large  amount  of  money  in  the 
cash  drawer.  The  money  deposited  remains  in  the  bank  subject  to  the  order 
of  the  depositor.  The  banks  require  that  when  cash  is  deposited,  the  depos- 
itor make  a  deposit  ticket  on  which  is  given  the  date,  name  of  depositor, 


OSITIiO  BY 


DEPOSITED  IN  THE 


Citizens  Savings  Banii 


WATERLOO,  lOfVA 


:Z 190-^ 


FIRST  NATIONAL  BANK 

OF  WATERLOO,  IOWA 


By 


Specify  the  banks  on  which  check*  are  drawn 
Dollars      Cents 


Banlc  Kotf \^iP  ^ 

Gold 

Silver 

Check$ 


PLEASE       LIST      EACH 

CHECK     SEPARATELY 

DOLLARS 

CENTS 

f 

/^ 

^o 

:?  / 

/   ^2. 

f  "^ 

J^ 

t^<3 

' 

V 

^ 

y^C 

7^' 

40 


PROGRESSIVE  BUSINESS   ACCOUNTING 


and  the  amount  and  kind  of  money  deposited.  The  bank  provides  a  pass 
book,  to  be  held  by  the  depositor.  In  this  book  the  bank  teller  places  the 
date  and  amount  of  each  deposit.  These  entries  in  the  pass  book  are  in  the 
nature  of  a  receipt  for  all  moneys  left.  The  pass  book  is  carried  by  the 
depositor  and  should  always  be  taken  to  the  bank  when  a  deposit  is  to  be 
made. 

A  2.  Deposit  in  the  bank  all  cash  on  hand,  $5,000.  Place  the  bills  neatly, 
right  side  up,  with  deposit  ticket  at  top,  and  all  in  the  pass  book.  Secure  a 
package  of  deposit  tickets  and  pass  book  of  your  banker. 

In  passing  any  papers  out,  write  the  transaction  number  in  the  upper 
left  corner. 

The  teller  of  the  bank  will  require  you  to  leave  your  signature  in  a 
book  or  on  cards  kept  for  that  purpose,  to  compare  with  other  signatures 
of  yours  on  other  papers.  Having  made  the  deposit,  examine  the  pass  book 
to  see  that  the  teller  has  entered  the  amount  correctly. 

INFORMATION  #  82.  A  check  is  an  order  drawn  on  a  bank,  directing 
the  bank  to  pay  a  certain  sum  of  money  to  the  proper  person  presenting  it. 
The  bank,  after  paying  the  check,  charges  the  amount  against  the  amount  to 
the  credit  of  the  depositor.  The  check  should  be  filled  in  writing  with  great 
care,  to  guard  against  its  being  altered  by  any  persons  who  handle  it. 
A  check  is  usually  made  payable  to  the  order  of  some  person,  which  signifies 
that  the  person  to  whom  it  is  written  (called  the  payee)  can  either  present 
it  to  the  bank,  or  he  can  pass  it  as  cash  to  some  other  person  by  indorsement ; 
i.  e.,  writing  name  across  the  back,  and  the  latter  person  can  present  it  for 
payment.  The  person ,  drawing  or  signing  the  check  is  called  the  drawer. 
The  bank  on  whom  the  check  is  drawn  is  called  the  drawee. 

Checks  are  most  conveniently  kept  in  books,  from  which  they  may  be 
removed  as  issued.  The  part  remaining  in  the  book  is  called  the  stub,  and 
on  it  is  the  full  record  of  the  check.  The  stub  should  also  show  the  balance 
in  the  bank,  each  check  amount  being  deducted  from  the  previous  balance 
and  the  remainder  carried  forward  to  the  next  stub. 

The  check  stub  should  be  filled  before  filling  the  check.  See  model  stub 
and  check. 


Ko.-ZL- 


FOR 


Bro't  (or'd 
Deposited 
Total 

This  Check 
C«r'd  for'd 


<^^/l? 


Walerloo,  Iowa,  J^"4v^^    /, 19^2^ 


No.^ 


Pay  tn  <^^-^g'<^-^>'3^t-^g^o-t-^:^^-.g-^^  (£U^z:Lr!L:zl^ (^nr  Order,  $!^^!£J3i: 

y^  j^  "^.^ — ■ — — 


Dollars 


i^r4g*^€<>^^x^>^-gZ<?-Z-'?^---fc-^^^ 


A3.  Rent  of  your  real  estate  company  a  store  room  and  basement  at 
168  Market  St.  for  a  period  of  one  year,  paying  cash  by  check  for  one  month's 
rent,  $50. 


PROGRESSIVE  BUSINESS  ACCOUNTING  41 

DIRECTION.  Fill  out  stub  and  check  as  shown  in  model,  detach 
the  check  and  carry  the  balance  of  your  deposit  left  in  the  bank  forward  to 
the  next  stub.  At  the  real  estate  office,  inform  the  agent  that  you  desire  to 
rent  the  property  as  mentioned.  Hand  him  the  check  for  the  first  month's 
rent  and  take  his  receipt  for  the  amount.  The  receipt  which  he  gives  you 
should  state  what  the  payment  is  for.  The  real  estate  agent  will  prepare 
and  hand  you  a  copy  of  the  lease  (the  contract  between  landlord  and  tenant) 
as  soon  as  practicable. 

INFORMATION  #  83.  Vouchers  in  business  are  the  written  evidence 
of  business  transactions.  The  receipt  given  you  above  is  a  voucher  showing 
that  you  have  paid  a  certain  amount  of  cash  for  a  certain  purpose. 

DIRECTIONS.  Stamp  the  receipt  on  the  back  with  the  voucher  stamp, 
giving  it  the  voucher  "No.  1."  Show  the  debit  and  credit  titles  affected 
by  this  transaction  on  the  back  of  the  voucher.  Make  entry  in  the  cash  book, 
charging  Expense.  For  explanation  write  ''Rent  one  month  V.  #1"  to 
indicate  that  a  full  record  of  the  transaction  will  be  found  on  voucher  No.  1. 
Place  the  voucher  in  the  paid  vouchers  file,  and  post  the  cash  book  entry  to 
the  ledger.  The  payment  of  cash  by  check  has  the  same  effect  on  your  cash 
balance  as  a  payment  in  currency  would  have. 

A  4.  Pay  the  Acme  Furniture  &  Fixtures  Co.  a  bill  of  office  and  store 
furniture  and  services  amounting  to  $362.  Give  your  check  for  the  amount 
and  take  a  receipted  bill.  Stamp  this  bill  on  the  back  V.  #2,  show  debit 
and  credit  titles  and  make  a  cash  book  entry  charging  Furniture  &  Fixtures, 
and  post  the  entry  to  the  ledger.  File  voucher  No.  2  away  after  folding  it 
in  such  a  way  as  to  place  the  number  uppermost. 

A  5.  Draw  from  the  bank  $50,  to  be  spent  in  sundry  small  cash  pay- 
ments; about  ten  bills  of  currency. 

DIRECTIONS.  Write  a  check  payable  to  "Cash"  and  place  on  the  back 
of  the  check  the  denominations  of  the  bills  wanted.  Deduct  this  check  from 
your  bank  balance,  but  make  no  cash  book  entry,  since  this  is  simply 
changing  the  kind  of  cash  you  hold  without  changing  the  amount. 

A  6.  Pay  Martin  Cole  $4.25,  and  Evert  Houser  $4  for  help  in  arrang- 
ing store.  Take  $8.25  to  the  general  agency  and  hand  the  cash  with  a  ticket 
explaining  the  transaction  to  the  clerk.  There  is  no  voucher  required  for 
this  transaction.     (Charge  Expense.) 

A  7.  Buy  of  the  Mullen  Stationery  Co.  books  and  stationery  for  office 
ase  amounting  to  $28.75,  for  which  pay  by  check.  Receive  their  receipted 
bill,  which  stamp  on  back  and  number  V.  #3.  Enter  in  cash  book  to  debit 
of  Expense,  and  post. 

A  8.     Buy  a  cash  register  of  A.  DeVoe,  paying  for  it  by  check,  $90. 
Receive  receipted  bill  as  usual,  which  number  "V.  #4."     Enter  and  post. 

A  9.  Buy  of  the  City  Ice  &  Fuel  Co.  coal  amounting  to  $28.60,  for  which 
give  your  check.     (Number  and  file  their  voucher;  charge  Expense.) 

AID.  Balance  the  cash  book:  (1)  Pencil  foot  the  credit  side  and  sub- 
tract from  the  total  of  the  debit  side  on  loose  paper.  (2)  Count  the  cash 
on  hand  and  add  it  to  the  amount  in  the  bank.  (3)  The  two  together  should 
equal  the  balance  shown  by  the  cash  book.  If  correct,  the  balance  is.  $4,432.40. 
Write  the  balance  in  red  ink,  rule,  foot,  and  carry  down,  as  you  were 
instructed  in  Ex.  X. 


42 


PROGRESSIVE  BUSINESS  ACCOUNTING 


Cut  a  ticket  from  your  writing  paper  exactly  four  inches  from  left  to 
right  and  three  inches  from  top  to  bottom.  Fill  this  card  as  shown  in  model 
form  and  pass  it  to  the  teacher's  desk. 


^2> 


Ot-t^^'-i^  /  f^  /  f  d?  f. 


^  /. 


7 


^=.^-Ei:«e.>^ 


A 11.    Buy  of  Kuhn,  Aldrich  &  Co.  the  following  goods : 
20  bx.  #1  Chocolate. 
20  cs.  Condor  Coffee. 
10  cs.  Gem  Glucose  Syrup. 
10  cs.  Good  Quality  Ground  Pepper. 
25  pi.  Town  Talk  Mixed  Candy. 


Milwaukee,  Wis.     Q^^^n^  /^r'/^/?a. 


Please  deliver 


^  k/^—^J^. ^^z^*t22iL 


./^TZ-C^-^f-^-^        C-^t!g-<;>-Z.--g:tS^ 


Terms    ^^''^^^z^ 


PROGRESSIVE   BUSINESS   ACCOUNTING 


43 


DIRECTIONS.  The  order  for  the  goods  should  be  written  on  an  order 
sheet,  of  which  a  carbon  copj^  is  to  be  retained  in  the  office.  Insert  the 
carbon  carefully  between  the  sheets  and  write  the  order  with  pencil  as  shown 
in  the  form. 

Kemove  the  upper  sheet  and  take  it  to  the  office  of  Kuhn,  Aldrich  &  Co., 
who  will  bill  the  goods  to  you  at  ten  days.  On  receipt  of  the  bill,  compare 
it  with  the  order,  and  if  the  goods  delivered  are  as  ordered,  compute  the 
extensions  and  addition.  If  found  correct,  write  O.  K.  and  your  initials  at 
the  bottom  of  the  bill.  Fold  the  bill  so  that  it  will  easily  slip  into  your 
voucher  file,  stamp  it  with  a  voucher  stamp  on  the  back,  and  show  that  the 
debit  title  is  Mdse.  and  the  credit  title  is  K.  A.  &  Co.  Enter  the  bill  in  your 
purchase  book,  as  in  model,  and  place  the  bill  (V.  #6)  in  the  file  for 
vouchers  payable. 


■%>^^  • 


Cht-t=^.^.^.e^   yi.^^  'Z/'^  X 


'J_J_J- 


ro 


Open  an  account  with  the  firm  of  whom  purchased  at  the  top  of  page 
7  of  your  ledger,  index  the  account,  and  post  the  credit,  writing  in  the 
explanatory  space  of  ledger  "V.  :^6  a/c  10  da.,"  folio  mark  in  ledger  and 
in  purchase  book. 

A  12.    Buy  of  Esmond  Canning  Co.  on  account: 
15  cs.  Ideal  Tomatoes. 
15  cs.  Red  Raspberries. 
50  cs.  Royal  Sweet  Corn. 
50  cs.  Lima  Beans. 
10  cs.  Holt  Co.  Gooseberries. 
DIRECTIONS.     Fill  the  order  sheet,  present  it,  and  receive  bill,  which 
you  will  audit,  and  enter  as  before.     Be  careful  that  no  mistakes  in  billing 
are  made.    Note  carefully  the  terms.     Stamp  "V.  #7"  and  show  debit  and 
credit  titles  as  instructed  in  A3.     Enter  in  the  purchase  book  and  file  the 
vouchers  with  vouchers  payable.     Open  an  account  with  Esmond  Canning 
Co.  on  page  7,  one-third  from  top.    Index,  post,  and  post  mark.    Notice  that 
the  terms  of  this  bill  differ  from  the  terms  of  the  previous  bill. 
A  13.     Buy  of  the  Ajax  Biscuit  Co.  on  account: 
10  doz.  1:;^  Box  Oatmeal  Crackers. 
20  doz.  1#  Box  Graham  Crackers. 
20  cs.  Big  White  Elephant  Biscuit. 
50  doz.  3#  Soda  Crackers. 
10  doz.  1#  Delicoes. 
5  can  12#  Emperor  Bars. 
5  can  10:#:  Mapline  Wafers. 
Proceed  as  before.     The  character  #  after  a  number  moans  pounds. 
A  14.     Sell  to  W.  A.  Damon,  129  Sixth  St.,  on  account  10  days: 


1  bx.  #1  Chocolate 

2  pi.  T.  T.  Mixed  Candy 

1  cs.  10#  G.  G.  Syrup 
5  cs.  Royal  Sweet  Corn 

2  cs.  B.  AV.  Elephant  Biscuit 


@ 
@ 
@ 
(5) 


$4.20 
$2.40 
$2.50 
$2.05 
$2.35 


44 


PROGRESSIVE   BUSINESS  ACCOUNTING 


DIRECTION.     Make  a  full  entry  of  this  sale  in  Sales  Book  as  shown  in 
the  model  form  below: 


£_/_£. 


^^r>^^:l^^->-^-.^^^^^y 


^a^/  ,1  ^i^y 


/  ^  ^ 


■Qg^l^^-g^^.^^ 


^ 


i 


Ji  ^-^iii^     -^^  ^fe.<,^<t:.c-»/  . 


-?  *^f 


■^  fa 


/       (£</.       /O^-^^.    J2/C^<-.-i.-<^ 


J^ 


c?,^     ^cS»-»^-»g-^^  I 


.^=^:±^2:i22^±:Jx. 


/  c 


J?    <w 


2->J^y~ , 


J.  /  ^AJ- 


Copy  this  sale  on  a  bill  head,  using  one  of  your  bills  received  as  a 
model.  When  the  bill  is  correct  deliver  it  to  W.  A.  Damon.  Open  an  account 
with  W.  A.  Damon  at  the  top  of  page  10  and  index  it.  Do  not  forget  to 
place  the  street  number  after  the  name  of  the  account.  The  street  number 
may  not  be  mentioned  again  in  future  transactions,  but  should  be  found 
by  referring  to  the  ledger.  Post  the  sale  to  the  debit  of  this  account,  naming 
the  terms  as  in  purchase  entries. 

A  15.    Sell  Cole  &  Camp,  38  Market  St.,  at  10  days  net: 

10  cs.  Lima  Beans  @    $1.90 

2  cs.  Condor  Coffee  @     $8.20 

5  doz.  !:#:  Graham  Crackers  @     $1.30 

8  doz.  3#  Sodas  @    $3.00 

1  can  12#  Emperor  Bars  @     $1.68 

1  can  10#  Mapline  Wafers  @     $1.80 

Enter  and  bill  as  before.     Open  the  account  on  page  10,  one-third  from 
top.    Hereafter  bill  sales  at  10  days  net  until  otherwise  directed. 
A  16.    Sell  DeLong  &  Co.,  1248  Ebersole  Ave., 

2  cs.  Holt  Co.  Gooseberries  @     $2.60 
1  cs.  Red  Raspberries                                               @     $2.90 

1  cs.  1/4 #  Extra  Pepper  @     $3.00 
10  cs.  Ideal   Tomatoes  @     $2.60 

2  doz.  1#  Oatmeal  Crackers  @     $1.30 
Enter  and  bill  as  before. 


J^^fi'71.^^  :2.\^        (S'e>-<^^yt^>t^i^  y^.s^^>L-^ 


.Vry  f^  yJl 


4^JL^    -JS;t£^:^^c^i::J'^ /iPU(^y 


^ 


kJ~  c-^ 


^-^^ 


■^ 


y.J. 


JAu. 


-L^ 


-^^-^  y^t^  y^?2^t--»L^>e/  i^-t^-fi^t^Y 


:^v^ 


_2_i£ 


*'~^J<^  ■-c:><^^,.i-t-<<-^ 


^-^-.t^  clt<-a^      a.-i&^^lii-^Lt,^ 


j^LAj. 


/  J'  i/- 


-;2^ 


LJi- 


^^^^^--Ztjz.^ 


^^  a  ^ 


^KJ 


PROGRESSIVE   BUSINESS   ACCOUNTING 


45 


^  ^  — t^-;^;^  yp^-^^fi-^  T^^^^^-^^ot-^.-,^.-^^^ 


^-^-t^o-^-^^ 


^y    <^Ag^     -i^S-.^    -TgP.g-<£^^^-^:Cg^t^  ^  >;-.^    2   4/: 


(t^    -t^. 


^   ^^ 


'^^^   -^  /  ^^^^-^^^^-y^ty  i:t-i-.^,:f^^ /j££ 


J/      <!.^    --^  ^-(^.^1^,6,^..^^..^ 


2.  Va 


^  J 


A  17.     Buy  of  Sunset  Fruit  Co.  on  account: 
40  bx.  #1  D.  Peaches. 
40  bx.  AA  Prunes. 
40  cs.  4^1  Raisins. 
40  bx,  Evap.  Apples. 
Fill  order  sheet,  which  present  and  receive  bill  as  usual. 
A  18.     Sell  Courtney  &  Son,  427  Sixth  Ave.,  on  account: 

5  OS.  Condor  Coffee  @     $8.20 

10  pi.  T.  T.  Mixed  Candy  @     $2.40 

5  cs.  10#  G.  G.  Syrup  @    $2.40 

5  cs.  Ideal  Tomatoes  @     $2.60 

3  cs.  Red  Raspberries  @     $2.90 
10  bx.  D.  Peaches                                                        @     $5.40 

4  bx.  Evap.  Apples  @     $4.60 
Complete  the  transaction  as  usual. 

A  19.  Write  a  check  in  payment  of  voucher  payable  #6.  Take  the 
bill  and  check  to  the  firm  to  whom  payment  should  be  made  and  request 
the  representative  of  that  firm  to  receipt  the  bill  when  you  present  the 
check.  Return  the  receipted  bill  to  the  file  for  vouchers  paid.  Make  entry 
in  the  cash  book  and  post  to  the  account  affected. 

CAUTION.  Be  careful  to  keep  both  paid  and  unpaid  vouchers  in  numer- 
ical order  with  the  last  number  at  top,  so  that  any  one  can  be  readily  found 
if  desired.  Remember  to  cross  off  the  paid  bills  from  the  ledger  as  shown 
in  a  previous  model. 

A  20.  Examine  your  cash  book.  Pencil  foot  the  purchase  and  sales 
books.  Prepare  and  head  a  ticket  3  in.  by  4  in.,  as  in  A  10,  and  write  on  it 
answers  as  follows: 

Cash  in  drawer  $ 

Cash  in  bank  $ 

Total  cash  $ 

Total   purchases  to   date       $ 
Total  sales  to  date  $ 

A  21.     Buy  of  Kuhn,  Aldrich  &  Co.,  on  account, 
50  bx.  Mint  Lozenges. 
50  bx.  Wintergreen  Lozenges. 
20  cs.  P.  C.  Syrup. 
DIRECTION.    Carry  the  total  of  sales  book  forward  to  top  of  next  page, 
as  shown  in  the  form. 


46  PROGRESSIVE   BUSINESS   ACCOUNTING 

A  22.     Sell  Mussett  &  Dennis,  420  Eighth  Ave.,  on  usual  terms: 
20  bx.  Mint  Lozenges  @     $  .80 

5  es.  Red  Raspberries  @     $2.90 

1  OS.  H.  C.  Gooseberries  @  $2.60 
8  doz.  1:^  Graham  Crackers                                      @     $1.30 

4  cs.  Big  White  Elephant  @     $2.40 

5  bx.  D,  Prunes  @     $4.25 
A  23.     Sell  Chase  Bros.,  562  Walnut  St.,  on  usual  terms: 

12  es.  #1  Raisins  @  $2.25 

12  cs.  Evap.  Apples  @  $4.60 

4  cans  12#  Empire  Bars                                        @  $1.68 

5  doz.  1#  Delicoes  @*  $1.30 
12  doz.  3#  Sodas  @  $3.00 

7  cs.  H.   C.  Gooseberries  @     $2.60 

A  24.  Sell  Mary  E.  Curley,  468  Walnut  St.,  on  usual  terms: 

5  bx.   12#   Chocolate  @     $4.20 

6  cs.  Condor  Coffee  @     $8.20 
20  bx.  Wintergreen  Lozenges  @     $  .80 

5  cs.  P.  C.  Syrup  @     $1.85 

6  cs.  Red  Raspberries  @     $2.90 

A  25.     Sell  to  Eagle  Hotel  Co.,  588  La  Fayette  St.,  on  usual  terms: 

25  cs.   Royal   Sweet   Corn  @  $2.05 

10  cs.  Lima  Beans  @  $1.90 

2  doz.  1#  Oatmeal  Crackers  @  $1.30 
2  doz.  1#  Graham  Crackers  @  $1.30 
2  bx.  #1  D.  Peaches  @  $5.40 
2  bx.  Prunes  @  $4.25 

DIRECTION.  When  the  bottom  of  the  sales  book  is  reached,  foot  the 
sales  and  carry  forward  to  the  next  page,  as  before. 

A  26.    You  are  out  of  Ideal  Tomatoes,  Red  Raspberries,  and  11.  C.  Goose- 
berries.   Buy  50  cases  each  of  the  firm  who  last  sold  them  to  you. 
A  27.     Sell  M.  C.  Remington,  29  River  St.,  usual  terms: 

10  cs.  Ideal   Tomatoes  @     $2.60 

5  cs.  Red  Raspberries  '       @     $2.90 

7  cs.  Condor  Coffee  @     $8.20 

5  bx.  12#   Chocolate  @     $4.20 

1  es.  1/4 #  Extra  Pepper  @     $3.70 

6  doz.  1#   Oatmeal  Crackers  @     $1.30 
A  28.     Sell  W.  B.  Bennett,  37  River  St.,  usual  terms : 

5  doz.  3#   Sodas  @  $3.00 

5  doz.  1#  Delicoes  @  $1.30 

5  cs.  Big  White  Elephant  @  $2.40 

2  cs.  #1  Raisins  @  $2.70 

3  pi.  T.  T.  Mixed  @  $2.40 

A  29.  Collect  cash  from  Courtney  &  Son  in  full  payment  for  the  invoice 
charged  against  them. 

DIRECTIONS.  Fill  a  receipt  form  showing  not  only  the  amount  of  cash 
received,  but  also  exactly  what  it  was  to  pay.  Sign  the  receipt  with  your 
usual  signature.     See  form. 


PROGRESSIVE  BUSINESS  ACCOUNTING 


47 


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After  you  have  collected  the  cash,  count  it  so  as  to  verify  the  amount, 
make  entry  in  cash  book,  and  post  to  the  ledger. 

A  30.  Make  pencil  footings  of  purchase  and  sales  books  and  prepare 
ticket  as  in  A 10,.  answering  the  following  questions: 

1.  Amount  of  cash  in  drawer. 

2.  Amount  of  cash  in  bank, 

3.  Total  cash. 

4.  Total  purchases. 

5.  Total  sales. 

Submit  the  ticket  when  filled  as  usual. 

A  31.    You  are  out  of  Condor  Coffee.     Buy  on  usual  terms  of  the  firm 
keeping  this  article,  24  cases,  together  with 
24  bx.  12#  Chocolate. 
30  pi.  T.  T.  Mixed  Candy. 
20  cs.  10#  G.  G.  Syrup. 
A  32.     Receive  cash  of  W.  A.  Damon  in  full  of  his  account.     (Give  a 
properly  written  receipt,  enter  the  currency  in  the  cash  book  and  post.) 

A  33.    Receive  of  Chase  Bros.,  to  apply  on  account,  $100.     (In  the  exi>lau- 
atory  part  of  the  receipt  write  "To  apply  on  account.") 
A  34.     Sell  Courtney  &  Son,  usual  terms: 

4  bx.  D.   Peaches  (g    $5.40 

1  can  10#  Mapline  Wafers  @     $1.80 

2  cs.  Big  W.  Elephant  @  $2.40 
6  cs.  Red  Raspberries  (5)  $2.90 
2  bx.  12#    Chocolate  @     $4.20 

INFORMATION  #  84.  The  Merchandise  Discount  account  is  kept  to 
show  the  amounts  allowed  for  the  payment  of  bills  before  they  are  due. 
Wholesale  houses  bill  their  sales  on  30  days,  60  days,  4  months,  6  months 
or  other  period  of  time,  the  period  usually  being  governed  by  the  kind  of 
goods  sold.  Quick  payment  is  desirable.  To  encourage  the  customer  to  pay 
promptly,  an  allowance  of  1%,  2%,  6%,  or  other  rate  according  to  contract, 
may  be  deducted  from  the  bill.  The  amount  paid  in  settlement  is  called 
the  net  amount,  and  the  amount  deducted  is  called  the  Merchandise  Dis- 
count. If  you  owe  Esmond  Canning  Co.  $259.00  for  goods  billed  2/10  n/60 
(2%  discount  if  paid  in  10  days  or  full  amount  if  paid  in  60  days),  the  dis- 
count if  paid  within  the  10  days  period  would  be  $5.18  and  the  cash 
payment  would  be  $253.82.  The  journal  entry  for  the  payment  would  be  as 
shown  in  model. 

The  debit  would  be  posted  to  the  Esmond  Canning  Co. 's  account  in  the 
ledger.  The  cash  credit  would  be  posted  to  the  cash  book  without  using 
the  title  column  as  in  model,  and  the  Mdse.  Disc't  would  be  posted  to  the 
ledger. 


48 


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A  35.  Write  a  cheek  in  full  for  voucher  payable  #10,  present  the  check 
and  have  the  voucher  receipted,  enter  in  cash  book  and  return  the  voucher 
to  paid  file,  post  and  X  mark. 

A  36.  "Write  a  receipt  in  favor  of  Cole  &  Camp  for  the  amount  due, 
and  collect  the  cash. 

A  37.     Sell  Chase  Bros.,  on  usual  terms: 

8  bx.  Prunes  @     $4.25 

4  bx.  Evap,  Apples  @    $4.60 

5  doz.  1#  Graham  Crackers  @     $1.30 
10  cs.  Lima  Beans  @     $1.90 

A  38.     Sell  W.  A.  Damon,  on  10  days'  account: 

10  cs.  H.  C.  Gooseberries  @     $2.60 

10  cs.  Royal  Sweet  Corn  .@     $2.05 

2  pi.  T.  T.  Mixed  Candy  @     $2.40 

4  bx.  Wintergreen  Lozenges  @     $  .80 

4  bx.  Mint  Lozenges  @     $  .80 

A  39.    Pencil  foot  the  first  column,  debit  side  of  cash  book.    Does  it  show 

that  you  have  received  $366.93  since  the  last  balance?     If  so,  deposit  this 

amount.     (Review  Infor.  #81  and  A  2.) 

A  40.  Balance  your  cash  book.  (Review  A 10  and  the  directions  after 
July  31,  in  Ex.  X.) 

Prepare  a  ticket  as  before  instructed,  on  which  answer  questions  as 
follows : 

1.  Amount  of  cash  in  drawer. 

2.  Amount  of  cash  in  bank. 

3.  Total  cash. 

4.  Total  purchases. 

5.  Total  sales. 

INFORMATION  #85.  Any  entry  affecting 
accounts,  that  cannot  be  entered  in  one  place  (i. 
cash  book,  should  be  entered  in  the  journal,  and  the  cash  portion  posted  to 
the  cash  book,  using  the  post  mark  "J"  in  the  cash  book  and  '"C"  in  the 
journal. 

A  41.     Pay  voucher  payable  #7  by  check. 

DIRECTIONS.  Take  V.  #7  from  your  file  and  under  the  total  of  the 
bill,  in  red  ink,  write  Less  2%  $5.18,  subtracting  the  discount,  write  below 
$253.82,  the  net  amount. 


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PROGRESSIVE  BUSINESS  ACCOUNTING  49 

Write  a  check  for  the  net  amount,  and  take  the  bill  and  check  to  the 
Esmond  Canning  Co.,  who  will  retain  the  check  and  return  the  bill  to  you 
receipted. 

Journalize  and  post  as  explained  in  Infor.  #84.     Write  in  explanatory 
space  of  ledger  "Cash  &  Discount." 
A  42.     Pay  Voucher  #8  by  check. 

Notice  on  the  bill  that  the  discount  allowed  is  1%  or  $2.37.  When  computing 
discount,  if  a  half  or  larger  fraction  of  a  cent  remains,  count  the  remainder  as  an 
additional  cent  discount.  Be  careful  to  keep  the  paid  vouchers  in  numerical  order 
so  that  the  last  number  shows  at  top. 

A  43.     Look  over  your  vouchers  payable  to  see  if  any  other  bills  are 
subject  to  discount  for  cash.     You  will  find  one.     Pay  it  as  before. 
Are  you  careful  about  post  marks? 
A  44.     Buy  of  Ajax  Biscuit  Co.,  on  usual  terms: 
10  cans  12#  Emperor  Bars. 
10  cs.  Big  W.  Elephant. 
40  doz.  1#  Oatmeal  Crackers. 
50  doz.  1#  Graham  Crackers. 
30  doz.  1#  Delicoes. 
5  cans  Mapline  Wafers. 
A  45.     Pay  Samuel  Hunt  in  currency  for  wages,  $12.     No  voucher  need 
be  made  for  transaction. 

A  46.     Pay  cash  for  sundry  small  expense  items,  $1.29. 
EXPLANATION.     Cole  &  Camp  have  made  arrangements  to  buy  goods 
in  quantity  so  that  you  can  allow  them  a  discount  of  3%.     Hereafter  bill 
goods  to  them  3/10  n/60. 

A  47.     Sell  Cole  &  Camp  on  account,  3/10  n/60: 

10  cs.  Royal  Sweet  Corn  @     $2.05 

40  cs.  H.  C.  Gooseberries  @     $2.60 

24  bx.  D.  Peaches  @    $5.40 

26  cs.  #1  Raisins  @     $2.70 

15  cs.  Condor  Coffee  @     $8.20 

8  cs.  Extra  Pepper  @    $3.70 

A  48.     Receive  of  Chase  Bros,  cash  enough  to  finish  payment  of  their 

first  bill,  $49.62. 

A  49.  Receive  of  Cole  &  Camp  cash  in  payment  of  their  last  bill.  A 
deduction  of  3%  is  made. 

A  50.     Make  a  ticket  showing: 

1.  Cash  received  since  balance. 

2.  Cash  paid  since  balance. 

3.  Cash  balance. 

4.  Total  purchases  to  date. 

5.  Total  sales  to  date. 

If  amounts  are  correct,  balance  the  cash  book. 

Post  total  of  purchase  book  to  debit  of  Merchandise  and  total  of  sales 
book  to  credit  of  Merchandise,  ruling  and  postmarking  as  shown  in  Ex.  X. 

Take  a  trial  balance  on  a  loose  sheet  of  paper,  head  as  usual  and  pass 
in  for  inspection.    If  correct,  copy  it  on  page  8  following  the  cash  book. 

INFORMATION  #86.  Cash  sales  may  be  posted  to  the  individual 
account  to  the  debit  of  a  customer,  if  it  is  desired  to  keep  a  ledger  record 


50 


PROGRESSIVE  BUSINESS  ACCOUNTING 


of  his  purchases.  There  are,  however,  many  cash  sales  which  require  no 
personal  ledger  account.  The  latter  sales  should  be  entered  in  the  sales  book, 
as  in  model  here  given. 


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The  amount  of  cash  is  immediately  carried  to  the  cash  debit  in  the 
cash  book,  the  letters  "C"  and  "S"  being  used  in  the  folio  columns,  as  above. 

The  effect  of  these  two  entries  is  to  debit  Cash  in  cash  book  and  to  credit 
Mdse.  in  the  total  to  be  posted  from  the  sales  book  at  a  later  time. 

INFORMATION  #  87.  Cash  purchases  which  require  no  personal 
account  are  entered  in  the  purchase  book  as  in  model. 

From  the  purchase  book  they  are  transferred  to  the  cash  book. 


The  effect  of  these  two  entries  is  to  debit  Mdse.  in  the  total  from  the 
purchase  book  and  to  credit  Cash  in  the  cash  book. 

A  51.  Sell  Henry  Kuba,  49  La  Salle  St.  (with  whom  keep  no  account), 
for  cash,  1  cs.  G.  G.  Syrup  @  $2.50,  6  bx.  Wintergreen  Lozenges  @  $  .80. 

Start  new  sales  record  at  top  of  page  7.  See  model  Infor.  #86.  Make  out  bill 
receipted  and  hand  to  Kuba. 

A  52.  Sell  D.  G.  Joslyn  (no  account),  for  cash,  5  bx.  12#  Chocolate 
@  $4.20. 

A  53.  Buy  of  the  Treadles  Commission  Co.,  60  brl.  Vinegar  as  per  their 
bill,  and  pay  for  same  by  check.  (Enter  on  page  2  of  purchase  book.  No 
ledger  account.) 

A  54.  Buy  of  Eubenstein  &  Slossen,  for  cash  (no  account),  20  R.  N.  Y. 
Cheeses.     Take  their  receipted  bill. 


PROGRESSIVE  BUSINESS  ACCOUNTING  51 

A  55.     Sell  Cole  &  Camp,  on  account,  3/10  n/60: 

10  brl.  Vinegar,  542  gal.  @     $  .34 

10  R.  N.  Y.  Cheeses,  621#  @     $  .ISi/o 

20  bx.  Evap.  Apples  @     $4.60 

A  56.     Buy  of  Sunset  Fruit  Co.,  on  account: 
40  bx.  #1  D.  Peaches. 
40  cs.  #1  Raisins. 
60  bx.  Evap.  Apples.  * 

A  57.    Pay  voucher  #9.     (Do  not  overlook  any  of  the  details.) 

A  58.     Collect  of  Mussett  &  Dennis  cash  in  full  of  account.    (Give  receipt.) 

A  59.    Deposit  in  bank  $620. 

A  60.     Pencil  foot  cash,  purchase,  and  sales,  since  last  ruling. 

Prepare  and  submit  a  ticket  showing: 

1.  Cash  received  since  ruling. 

2.  Cash  paid  since  ruling. 

3.  Purchases  since  ruling. 

4.  Sales  since  ruling. 

Add  cash  in  bank  to  cash  in  drawer  and  compare  with  balance  shown 
by  cash  book.     If  correct,  balance  the  cash  book. 

INFORMATION  #  88.  Sales  for  notes  may  be  posted  to  the  individual 
account  in  the  ledger,  the  sale  to  the  debit  and  the  note  given  in  exchange 
to  the  credit  of  the  customer,  if  it  is  desired  to  keep  a  ledger  record  of  his 
purchases.  There  are  many  sales  of  this  kind  which  require  no  personal 
ledger  account.  The  latter  sales  should  be  entered  in  the  sales  book  as  in 
model  on  page  33. 

The  amount  of  the  note  is  posted  to  the  debit  of  Notes  Receivable,  to 
balance  the  credit  which  is  included  in  the  Mdse.  total. 

INFORMATION  #89.  Purchases  for  a  note,  when  the  individual 
account  is  not  desired,  may  be  entered  in  the  purchase  book  as  in  model  and 
posted  to  the  credit  of  Notes  Payable.  The  corresponding  debit  is  included 
in  the  Mdse.  total.    See  model  on  page  32. 

A  61.  Sell  William  Floyd,  420  Fifth  Ave.,  on  his  demand  note  drawing 
interest  from  date  at  6  per  cent: 

2  R.  N.  Y.  Cheeses,  101#  @    $  .ISVa 

5  cs.  Lima  Beans  @    $1.90 

5  bx.  #1  D.  Peaches  @     $5.40 

5  cs.  Prunes  @    $4.25 

5  cs.  Evap.  Apples  @    $4.60 

DIRECTIONS.  Bill  the  goods  as  shown  in  Infor.  #88,  receipting  the  bill 
in  the  following  form: 

Settled  by  note, 

John  Manning. 
Fill  out  a  note  as  shown  in  the    following    form    except  the  signature, 
which  William  Floyd  will  attach  to  the  note  in  his  own  handwriting. 

Secure  the  signature  of  William  Floyd  on  the  note,  and  deliver  to  him 
the  receipted  bill.  Place  the  note  in  the  file  for  notes  receivable.  Remember 
to  place  the  payer  of  the  note  in  the  explanatory  space  of  the  ledger. 


52  PROGRESSIVE  BUSINESS   ACCOUNTING 


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A  62.     Sell  Edward  Read,  on  his  30-day  note,  at  6  per  cent: 

20  brl.  Vinegar,  1088  gal.  @     $  .34 

A  63.     Sell  John  Hart,  for  cash  (no  account)  : 

50  bx.  Mint  Lozenges  @     $  .70 

A  64.     Sell  Cole  &  Camp,  on  account,  3/10  n/60: 

15  cs.  Lima  Beans  @     $1.90 

15  cs.  Ideal  Tomatoes  @     $2.60 

6  R.  N.  Y.  Cheeses,  372#  @     $  .131/^ 

6  cs.  Evap.  Apples  @     $4.60 

5  brl.  Vinegar,  253  gal.  @     $  .34 

A  65.    Buy  of  the  Esmond  Canning  Co.,  on  usual  terms : 
100  cs.  Ideal  Tomatoes. 
200  cs.  Royal  Sweet  Corn. 
100  cs.  Lima  Beans. 
10  cs.  H.   C.  Gooseberries. 
A  66.     Buy  of  Spanish-American  Imp.  Co.,  giving  in  payment  a  30-day 
note  drawing  6  per  cent  interest: 
20  hhd.  Olives. 
Write  the  note  carefully  as  soon  as  you  learn  the  amount  of  the  bill. 
Make  entry  in  the  purchase  book  and  post  to  the  credit  of  Notes  Payable. 
Remember  to  give  the  payee's  name  in  the  explanatory  space. 

A  67.     Sell  to  R.  W.  Emerson,  receiving  in  payment  his  10-day  note : 
2  brl.  Vinegar,  102  gal.  @     $  .34 

1  hhd.  Olives,  125  gal.  @    $  .72 

A  68.    Pay  voucher  #17  by  check.     (Make  journal  entry.) 
A  69.     Settle  voucher   #16  with  your  30-day  note  with  interest  at  6 
per  cent.     See  that  the  voucher  is  properly  receipted.     (Enter  in  journal.) 
A  70.     Prepare  a  ticket  answering  the  following: 

1.  Amount  of  cash  balance. 

2.  Purchases  since  last  posting. 

3.  Sales  since  last  posting. 

4.  Total  of  the  debit  column  of  journal. 

5.  Total  of  credit  column  of  journal. 

EXPLANATION.  The  student  will  observe  that  all  entries  made  in  the 
four  books  of  original  entry  which  he  uses  could  have  been  made  in  a  journal. 
But  the  labor  of  posting  item  by  item  from  a  journal  forbids  its  use  in  this 
way.  The  labor  of  entry  would  also  be  greater.  The  number  of  books  in 
which  the  original  entries  are  made  might  be  increased  if  there  were  a  suffi- 


PROGRESSIVE  BUSINESS   ACCOUNTING  53 

cient  number  of  special  kind  of  entries  not  provided  for  to  justify  the  use 
of  some  other  special  book.  In  a  general  buying  and  selling  business,  the 
books  here  used  may  be  considered  the  best  arrangement.  Whether  one  or 
more  special  books  are  used,  the  following  rule  is  observed : 

INFORMATION  #  90.  The  journal  takes  all  entries  not  provided  for 
in  any  other  book. 

A  71.  Collect  cash  of  M.  C.  Remington,  Mary  E.  Curley  and  De  Long 
&  Co.,  in  full  of  their  purchases. 

Instead  of  writing  receipts,  they  hand  you  the  bills,  which  you  passed  to  them 
when  you  sold  the  goods.  If  they  cannot  produce  any  of  the  bills,  write  receipts  as 
before.     Post  to  their  accounts  and  X  mark  ledger  to  show  full  payment. 

EXPLANATION.  Hereafter  in  Set  A,  the  student  will  bill  all  goods 
2%  higher  than  heretofore,  and  will  allow  all  ledger  customers  terms  2% 
10  days  or  net  30  days,  with  the  exception  of  Cole  &  Camp,  who  will  be 
allowed  5%  10  days,  net  60  days. 

A  72.     Sell  Eagle  Hotel,  on  account,  2/10,  n/30 : 

3  doz.  1#  Oatmeal  Crackers  @  $1.33 
1  cs.  B.  W.  Elephant  @  $2.44 
1  bx.  #1  D.  Peaches  @     $5.50 

1  hhd.  Olives,  63  gal.  @     $  .74 
A 73.     Sell  Mary  E.  Curley,  on  account,  2/10,  n/30: 

6  bx.  12#  Chocolate  @  $4.28 

5  cs.  Condor  Coffee  '  @  $8.36 

6  cs.  R.  C.  Syrup                                                 @  $2.10 
20  cs.  Royal  Sweet  Corn                                     @  $2.45 

2  R.  N.  Y.  Cheeses,  124#  @  $  .15 
A  74.     Sell  M.  C.  Remington,  on  account,  2/10,  n/30 : 

2  brl.  Vinegar,  103  gal.  @  $  .35 

20  cs.  H.  C.  Gooseberries  @  $2.65 

10  cs.  Lima  Beans  @  $1.95 
A  75.     Sell  Frank  Lightfoot  for  cash   (no  ledger  account) : 

5  hhd.  Olives,  310  gal.  @  $  .71 
A  76.     Sell  Oscar  Anderson,  on  his  demand  note  drawing  6%  from  date. 
(Fill  out  the  note  for  his  signature.) 

150  cs.  Royal  Sweet  Corn  @  $2.05 

50  cs.  Lima  Beans  @  $1.90 
A 77.     Sell  Mussett  &  Dennis,  account  2/10,  n/30: 

12  doz.  1#  Delicoes  @  $1.32 

6  cans  Emperor  Bars  @  $1.70 

6  cans  Mapline  "Wafers  @  $1.85 

4  pi.  T.  T.  Mixed  Candy  @  $2.45 

A  78.     Sell  to  the  Alaska  Outfitting  &  Supply  Co.  for  cash  (no  account) : 
100  cs.  Ideal  Tomatoes  @     $2.45 

4  hhd.  Olives,  252  gal.  @     $  .70 

A  79.  Deposit  in  the  bank  all  cash  received  since  the  cash  book  was 
balanced. 

A  80.     Balance  the  cash  book.     (Do  not  forget  to  prove  balance  by  com- 
paring it  with  the  sum  of  cash  in  bank  and  cash  in  drawer.) 
Prepare  the  following  report  ticket: 

1.  Cash  balance. 

2.  Total  purchases  since  posting. 

3.  Total  sales  since  posting. 


54  PROGRESSIVE  BUSINESS  ACCOUNTING 

A  81.     Buy  of  the  Esmond  Canning  Co.  on  account: 
50  cs.  Lima  Beans. 
100  cs.  Royal  Sweet  Corn. 
50  cs.  Red  Raspberries. 
100  cs.  Ideal  Tomatoes. 
A  82.     Buy  of  Kuhn,  Aldrich  &  Co.  on  account : 
20  cs.  Condor  Coffee. 
20  cs.  14#  Extra  Pepper. 
40  cs.  P.  C.  Syrup. 
A  83.     Pay  Samuel  Hunt,  wages  to  date,  in  currency,  $12. 
A  84.     Pay  Burrows  Transfer  Co.  by  check,  drayage  account  for  delivery 
of  outgoing  merchandise,  $21.43.     (Charge  Expense.)     Take  their  receipted 
bill. 

A  85.  Collect  cash  from  the  Eagle  Hotel  Co.  for  the  first  bill  sold  them. 
Receipt  the  bill. 

A  86.  Settle  with  "W.  B.  Bennett,  by  taking  his  note  at  30  days  with 
6%  for  the  amount  due.     Receipt  his  bill.     (Enter  in  journal.) 

A  87.  Give  your  30-day  note  at  6%  to  Kuhn,  Aldrich  &  Co.  in  settle- 
ment of  voucher  #12. 

INFORMATION  #91.  When  a  note  is  paid,  the  holder  of  the  note 
writes  "Paid"  with  his  signature  across  the  face  and  surrenders  it  to  the 
payer.  This  is  a  sufficient  receipt,  as  the  evidence  of  the  indebtedness  passes 
into  the  payer's  hands. 

A  88.  Collect  cash  of  Oscar  Anderson  for  his  demand  note,  $402.50, 
and  interest  to  date  $.27. 

The  time  will  be  considered  4  days  in  order  to  secure  uniform  results.  Enter 
in  the  cash  book,  crediting  two  accounts,  Notes  Rec.  and  Interest.  When  posting  to 
ledger,  X  mark  the  note  paid. 

A  89.     Give  your  check  for  the  note  due  the  Spanish  A.  Importing  Co., 
$696.08,  and  interest  computed  at  6  days  $.70.     (Receive  the  cancelled  note 
and  paste  it  to  the  stub  of  the  note  in  the  note  book.     Make  two  entries  in 
cash  book,  titles:  Notes  Payable  and  Interest.) 
A  90.     Make  a  report  ticket  showing: 

1.  Cash  receipts  since  last  balance. 

2.  Cash  payments  since  last  balance. 

3.  Footing  of  purchase  book. 

4.  Footing  of  sales  book. 

INFORMATION  #  92.  A  statement  to  a  customer  is  a  form  in  which 
are  listed  all  his  debits  and  credits  as  they  appear  in  the  customer's  ledger 
account.  It  is  advisable  to  send  statements  to  customers  on  the  last  day 
of  each  month.  The  statement  shows  his  dealings  for  that  period  and  the 
balance  due.  The  customer,  on  receiving  the  statement,  should  check  it  with 
his  books  and  should  report  to  the  one  issuing  the  statement  any  discrep- 
ancies, if  such  occur.  Customers,  when  they  settle  the  account  by  paying 
the  balance  shown  on  the  statement,  frequently  have  the  statement  receipted 
as  a  bill  would  be  receipted,  and  use  the  statement  as  a  voucher.  The  model 
statement  of  Cole  &  Camp's  account  illustrates  the  form  to  be  used. 

INFORMATION  #93.  The  term  accounts  receivable  includes  all 
accounts  with  persons  who  buy  of  us  and  who  have  debit  balances.  Accounts 
of  this  nature  should  be  given  a  separate  place  in  the  ledger,  or,  if  they  are 
many,  a  separate  ledger  should  be  kept  for  them. 


PROGRESSIVE   BUSINESS  ACCOUNTING 


55 


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A  91.  Receive  statements  from  Kuhn,  Aldrich  &  Co.,  Esmond  Canning 
Co.,  and  Ajax  Biscuit  Co.  Compare  these  statements  with  the  accounts  in 
your  ledger  and  if  they  agree,  place  them  in  j^our  file  of  miscellaneous  papers. 

A  92.  Make  out  statements  for  all  of  your  customers  showing  unsettled 
accounts,  eight  in  number,  and  present  the  statements. 

A  93.  Receive  cash  of  W.  A.  Damon  in  full  of  his  account.  Receipt  the 
statement  which  you  handed  him. 

A  94.  Balance  your  cash  book  and  take  a  trial  balance  of  your  accounts. 
Record  the  trial  balance  on  page  9  of  the  trial  balance  book.  Remember  that 
totals  of  purchase  and  sales  books  must  be  posted  before  taking  trial  balance. 

Review  in  Ex.  VII.  Infor.  #36,  37,  38,  39,  and  40. 

INFORMATION  #  94.  An  inventory  is  a  list  of  property  or  value  at 
hand  pertaining  to  any  given  account.     Merchandise  or  other  chattels  are 


56 


PROGRESSIVE   BUSINESS   ACCOUNTING 


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inventoried  from  an  actual  count  of  the  items  on  hand  listed  on  journal 
ruling.  After  the  list  is  taken,  a  price  is  placed  on  each  kind.  This  price 
is  the  present  market  value,  or  what  it  would  take  to  replace  the  goods — not 
the  selling  price.  The  extensions  are  then  made,  and  the  total  is  called  the 
inventory  value  or  cash  value  of  the  account. 
(For  liability  inventory,  see  Infor.  #140.) 


PROGRESSIVE  BUSINESS   ACCOUNTING 


57 


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A  95.  Find  the  cash  value  of  the  Merchandise,  Furniture  &  Fixtures, 
and  Expense  accounts. 

The  items  of  the  inventories  and  the  prices  are  shown  in  the  model  form. 
Copy  these  inventories  on  page  11  of  the  purchase  and  sales  book,  extend  the  prices 
where  needed  and  find  the  totals. 

Caution:  It  is  advisable  to  make  these  difficult  lists  on  loose  paper  until  they 
are  found  to  be  absolutely  correct.    They  can  then  be  copied  in  the  permanent  books. 

INFORMATION  #  95.  When  the  books  are  to  be  closed,  in  addition  to 
the  inventories  of  property,  there  should  be  taken  lists  of  the  notes  receiv- 
able, accounts  receivable,  notes  payable  and  accounts  payable.  These,  to- 
gether with  the  cash  balance,  should  be  placed  in  the  inventor}^  book,  so 
that  complete  detailed  lists  of  all  resources  and  liabilities  may  bo  found,  if 
looked  for,  in  one  place  under  one  date. 


58  PROGRESSIVE   BUSINESS  ACCOUNTING 

A  96.     Place  the  cash  balance  in  page  12  of  inventories  as  in  model. 

Make  a  list  of  the  notes  which  you  received  and  now  have  on  hand  on 
the  same  page,  total  the  list  and  compare  the  total  with  the  Notes  Receivable 
balance  in  the  trial  balance. 

Make  a  list  of  the  Accounts  Receivable  balances  from  the  ledger.  Total 
the  list  and  compare  the  total  with  the  total  of  accounts  due  you  in  the  trial 
balance.  Make  a  list  of  the  notes  payable  from  the  stubs  of  the  notes  payable 
book.  Omit  the  one  that  is  paid.  Compare  this  list  with  the  balance  of 
Notes  Payable  in  the  trial  balance. 

Make  a  list  of  the  Accounts  Payable,  taking  the  amounts  from  the 
vouchers  payable  tile.  Compare  this  list  with  the  total  of  balances  due  others 
found  in  the  trial  balance. 

INFORMATION  #  96.  A  Statement  of  the  Business  is  a  formal  list  of 
all  resources  and  their  total,  of  all  liabilities  and  their  total,  and  the  differ- 
ence between  totals  of  resources  and  liabilities  showing  the  net  worth. 
Statements  aie  made  periodically  to  show  the  progress  or  condition  of  the 
business  to  those  who  are  financially  interested. 

A  complete  statement  requires  also  a  detailed  exhibit  of  the  gains  and 
losses.    The  model  form  is  a  correct  statement  of  the  present  business. 

A  97.    Make  a  statement  of  your  business : 

On  journal  paper,  after  writing  the  heading,  copy  the  resources 
and  liabilities  from  your  inventory  book  and  find  the  difference,  which  is 
your  net  worth. 

You  will  observe  that  five  of  the  commercial  accounts  show  a  balance 
on  the  ledger  either  greater  or  less  than  the  cash  value  of  the  inventory. 
These  are 

Merchandise,  ledger  Dr.  balance $2,320.68        Inventory $2,812.45 

Furniture  &  Fixtures,  ledger  Dr.  balance     452.00  ''         295.00 

Expense  ''        "  "         162.32  "  ....        25.50 

Interest   &  Discount  "        "  "  .43  "         none 

Mdse.   Disci  "       Cr.  "  20.14  "         ....         none 

Remember  that  a  resource  inventory  is  properly  an  additional  credit 
to  an  account;  therefore,  those  accounts  having  resource  inventories  plus 
credit  total  greater  than  the  debit  totals  show  gains. 

Those  accounts  having  a  debit  total  greater  than  the  resource  inventories 
plus  the  credit  totals  (if  any)  show  losses. 

Thus,  the  following  accounts  show  gains :  Merchandise  and  Merchan- 
dise Discount. 

The  following  show  loss:  Furniture  &  Fixtures,  Expense,  and  Interest 
&  Discount.     Place  the  gains  first  on  the  statement,  as  follows: 

Mdse.  sales  from  ledger  $4,230.67,  plus  Inventory  $2,812.45,  less  Mdse. 
purchases  $6551.35. 

Mdse.  Disct.  received  $34.45,  less  allowed  $14.31. 

Afterward  place  the  losses  as  follows : 

Furn.  &  Fixt.  purchases  $452,  less  inventory  $295. 

Expense,  purchases  $162.32,  less  inventory  $25.50. 

Int.  &  Disct.  allowed  70  cts.,  less  received  27  cts. 

From  the  total  gains  subtract  the  total  lo.sses.    The  result  is  the  net  gain. 

To  the  net  gain  add  the  proprietor's  worth  at  starting.  The  result  is 
the  present  net  worth,  equal  to  the  net  worth  shown  by  the  difference  between 
resources  and  liabilities  given  above. 

Rule  and  finish  the  statement  as  in  model. 


PROGRESSIVE  BUSINESS  ACCOUNTING 


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TO  THE  STUDENT.  A  thorough  understanding  of  a  business  statement 
is  one  of  the  necessary  accomplishments  of  a  business  man.  Master  each 
step  until  you  can  tell  not  only  how  but  why  it  is  taken.  Copy  the  statement 
on  page  11  of  the  journal,  cash,  and  statements  book. 


60 


PROGRESSIVE   BUSINESS   ACCOUNTING 


A  98.  Close  the  ledger  and  take  a  trial  balance  after  closing.  Record 
the  trial  balance  on  page  10  of  trial  balances. 

A  99.  Deposit  all  cash.  Leave  your  bank  pass  book  at  the  bank  to  be 
balanced  and  the  checks  returned.  Request  the  teller  not  to  have  the  account 
written  up  until  a  check  for  $2,296.09,  which  you  will  issue  later,  is  presented 
and  paid. 

INFORMATION  #  97.  The  bank  usually  balances  a  depositor's  account 
and  returns  the  vouchers  or  checks  on  the  last  day  of  the  month.  On  re- 
ceiving his  book  returned  by  the  bank,  or  his  statement,  the  depositor  should 
compare  it  with  his  own  bank  balance  and  record  of  deposits  and  checks 
to  see  if  any  error  has  been  made.  If  all  is  correct,  the  checks  issued  and 
paid  should  be  pasted  to  their  original  stubs  as  with  notes  explained  in  A  89. 

A  100.  You  will  now  sell  your  entire  business  as  it  stands  to  your 
teacher  on  the  terms  mentioned  in  the  following  journal  entry  to  be  copied 
in  the  journal: 

The  business  of  (student's  name)  has  this  day  been  sold  and  transferred 
to  (teacher's  name)  for  a  consideration  of  $6,000  cash  in  hand  paid. 
(Teacher's  name)  will  collect  all  outstanding  accounts  and  pay  all  outstand- 
ing liabilities  of  the  business. 

In  accordance  with  the  above,  make  out  a  bill  of  sale  in  favor  of  the 
teacher.     (See  legal  forms.) 

Write  a  check  in  his  favor  for  the  bank  balance. 

Indorse  all  notes  receivable  to  him,  using  form  No.  4  below. 


INFORMATION  #  98.  Transfer  indorsements  are  written  in  several 
forms.  The  most  common  of  these  are  illustrated  in  the  above  five  speci- 
mens, numbered  1  to  5.  No.  1  is  an  indorsement  in  blank.  "When  the  payee 
indorses  it  thus,  the  paper  becomes  payable  to  bearer.  No.  2  is  an  indorse- 
ment for  deposit.  It  is  used  when  paper  is  to  be  deposited  at  the  bank. 
Paper  thus  indorsed  is  not  payable  to  bearer. 

No.  3  is  a  restrictive  indorsement,  as  its  effect  is  to  make  the  paper 
payable  to  one  certain  person. 

No.  4  is  an  indorsement  in  full.  It  has  the  effect  of  making  the  paper 
payable  to  the  indorsee  or  to  any  person  to  whom  he  may  indorse  it. 

No.  5  is  an  indorsement  without  recourse.  The  intention  of  the  indorser 
is  to  pass  the  title  in  the  paper  while  he  at  the  same  time  releases  himself 
from  liability  for  its  payment. 


PROGRESSIVE  BUSINESS  ACCOUNTING  61 

Pin  the  check,  notes,  and  bill  of  sale  together.  Make  a  neat  package  of 
your  vouchers  paid  and  payable,  using  a  rubber  band  around  all  the  papers. 

Remove  the  contents  of  the  books  of  record.  Pin  each  at  the  back.  At 
the  front  top  of  each  write  a  heading  similar  to  those  used  in  submitting 
previous  exercises  and  pass  the  entire  work  to  the  teacher  for  inspection. 

QUESTIONS.     1.     What  is  a  jobbing  business? 

2.  For  what  purpose  is  a  ledger  index  used?     Describe  it. 

3.  What  is  a  voucher? 

4.  What  is  a  receipt?    How  used? 

5.  What  is  the  principal  business  of  a  bank? 

6.  How  is  a  deposit  ticket  used? 

7.  How  is  a  bank  pass  book  used? 

8.  What  is  a  bank  check?    How  used? 

9.  What  is  a  check  book? 

10.  What  is  a  bill? 

11.  Describe  the  duplicate  order  blanks. 

12.  Describe  the  purchase  book. 

13.  Describe  the  sales  book. 

14.  What  is  meant  by  terms  of  a  sale? 

15.  What  is  the  process  of  having  a  bill  receipted  when  paid? 

16.  Explain  the   Merchandise   Discount   account. 

17.  Where  should  a  combined  entry  affecting  cash  and  other  accounts 
be  made?    Why  in  the  journal? 

18.  What  is  a  cash  discount? 

19.  What  two  methods  of  entering  cash  sales  in  the  sales  book  may  be 
used? 

20.  What  two  methods  of  entering  sales  for  notes  in  the  sales  book  may 
be  used? 

21.  How  is  a  bill  receipted  to  show  settlement  by  note? 

22.  What  entries  are  to  be  placed  in  the  journal  when  other  books  of 
original  entry  are  used? 

23.  What  voucher  is  received  by  the  payer  of  a  note? 

24.  Describe  a  statement  to  a  customer. 

25.  What  is  meant  by  the  term  accounts  receivable? 

26.  Is  it  customary  to  receipt  a  customer's  statement  when  payment  in 
full  is  made? 

27.  How  are  inventories  taken? 

28.  Why  are  lists  of  notes  and  accounts  payable  and  notes  and  accounts 
receivable  taken  when  closing  a  ledger? 

29.  What  is  a  statement  of  the  business? 

30.  How  should  a  depositor  compare  a  bank  statement  of  account  when 
the  latter  is  returned? 

31.  What  is  a  bill  of  sale  and  when  used? 

32.  Why  is  a  notice  to  interested  firms  sent  when  a  change  occurs  in 
the  ownership  of  a  business? 

33.  Name  the  books  used  in  the  jobbing  set. 


62 


PROGRESSIVE  BUSINESS  ACCOUNTING 


EXERCISE  XI 

INFORMATION  #  100.  A  statement  of  any  business  showing  resources 
and  liabilities,  losses  and  gains  and  net  worth  can  be  made  from  a  trial 
balance  and  inventories.  It  is  more  satisfactory  to  have,  in  addition  to  these, 
the  footings  of  the  ledger  accounts,  because  the  footings  show  the  amount 
of  business,  while  the  trial  balance  and  inventories  show  merely  the  results. 

#  101.  In  making  a  statement  of  the  business,  if  it  appears  by  inspec- 
tion that  the  sum  of  the  gains  will  be  found  to  exceed  the  sum  of  the  losses, 
place  the  gains  above  and  the  losses  below,  as  in  A  97.  If  it  appears  that 
the  sum  of  the  losses  will  exceed  the  sum  of  the  gains,  place  the  losses  above 
and  the  gains  below. 

#  102.  A  statement  of  the  business  is  to  show  the  amount  and  kind  of 
resources  and  liabilities,  and  the  net  worth,  the  amount  and  kind  of  losses 
and  gains,  and  the  volume  of  business  transacted  in  a  given  period. 

EXPLANATION.  In  this  exercise,  the  student  will  be  given  the  ledger 
footings  and  the  inventory  totals  of  two  business  concerns.  From  each  of 
these  he  will  be  required  to  make  a  statement,  one  of  which  will  show  a  net 
loss  and  the  other  a  net  gain. 

DIRECTIONS.  Take  a  half  sheet  of  journal.  At  the  top  of  one  side 
write  "Statement  of  John  Doe."  At  the  top  of  the  reverse  side,  "Statement 
of  John  Moe. "  One  sheet  only  is  to  be  handed  in  at  the  close  of  this  exercise. 
All  other  preliminary  work  necessary  to  making  the  statement  can  be  written 
on  loose  paper  and  destroyed  after  it  has  served  its  purpose.  Below  are  given 
the  footings  of  John  Doe's  ledger: 

John   Doe,    Proprietor Dr. 

Cash    

Mdse 

Furniture    &   Fixtures 

Expense    

Notes  Payable    

Notes  Receivable   

Dollman  &  Co , 

Martin  &  Camp 

Parker   &   Son 

James  &  Co 

Smith   &   Son 

C.  W.  Brown 


)r C 

r.  $  4,000.00 

"   $  1,325.82 
15,421.90 

18,624.70 

429.89 
4,281.73 

4,281.70 

5,923.40 

7,481.30 

4,783.26 

231.80 

1,527.30 

14.80 

329.60 

597.42 

1,287.16 

1,789.63 

247.80 

587.93 
427.90 

148.60 

The  cash  values  of  the  commercial  accounts  per  inventory  are  as  follows : 
Merchandise,  $7,521.80;  Furniture  &  Fixtures,  $400.00;  Expense,  no  value. 
All  other  accounts  are  valued  at  face. 

First,  satisfy  yourself  that  the  ledger  is  in  balance.  Next,  make  a  total 
of  the  balances  of  accounts  payable,  three  in  number,  and  of  accounts  receiv- 
able, three  in  number.  List  all  resources  and  total.  List  all  liabilities,  except 
proprietor,  and  total.  Find  present  worth.  Find  gains  and  losses  as  in 
model  A  97.  Find  net  gain  and  net  worth.  The  latter  should  prove  with 
net  w^orth  as  shown  above. 


PROGRESSIVE  BUSINESS  ACCOUNTING  63 

The  ledger  footings  for  the  second  statement  are  as  follows: 

John  Moe,  Proprietor Dr Cr.     $4,000.00 

Cash    "  $     384.38 

Merchandise    "  18,427.60          "        12,427.68 

Furniture   &   Fixtures "  1,728.90          "               12.60 

Expense    "  2,174.20 

Merchandise  Discount    ......   "  17.38 

Notes  Payable    "  500.00 

Martin  &  Camp "  120.00 

Parker   &   Son "  1,260.93 

Perkins,  Winn  &  Co "  4,291.60 

Garmore   &   Co "  357.90 

Peter  Moore   "  873.99 


169.20 
6,921.40 
1,387.60 
2,067.93 
2,729.50 

420.97 


The  cash  values  of  the  commercial  accounts  per  inventory  are:  Mer- 
chandise, $6,590.15;  Furniture  &  Fixtures,  $1,500;  Expense,  $74.  All  other 
accounts  are  valued  at  face.     Reread  Infor.   #101.     Complete  a  statement. 

DIRECTION.  AVhen  both  statements  are  complete,  head  the  work,  and 
pass  it  in  for  inspection. 

QUESTIONS.  1.  What  records  are  necessary  to  refer  to  in  making  a 
statement  of  any  business? 

2.  If  the  total  gains  exceed  the  total  losses,  in  what  order  should  the 
commercial  accounts  be  placed  in  a  statement? 

3.  If  the  losses  exceed  the  gains,  what  order  is  used? 

4.  What  does  a  statement  of  the  business  show? 

5.  May  a  statement  of  the  business  be  made  without  closing  the  ledger? 

EXERCISE  XII 

INFORMATION  #  103.  Every  business  transaction  should  present  to 
the  mind  a  clear  cut  picture  of  certain  debits  and  credits.  No  matter  what 
books  may  be  used,  the  bookkeeper  who  has  formed  the  habit  of  placing 
any  doubtful  entivy  in  journal  form  on  a  slip  of  paper  before  trying  to  place 
it  in  cash  book  or  other  books,  will  be  able  to  make  a  correct  entry  in  a  satis- 
factory way.  Many  who  have  failed  to  acquire  this  habit  have  found  the 
entries  in  advanced  bookkeeping  difficult,  and  have  often  spent  much  un- 
necessary time  in  confused  efforts  to  grasp  the  situation.  When  in  doubt, 
form  the  habit  of  arranging  entries  in  journal  form. 

EXPLANATION.  The  journal  entries  which  follow  are  not  a  connected 
record  of  any  business.  They  give  transactions  which  are  similar  to  those 
introduced  in  the  preceding  set.  They  are  dated  in  January  and  numbered 
1  to  31,  the  numbers  to  be  entered  like  days  of  the  month.  Nos.  1  to  25 
require  one  debit  and  one  credit  only.  Nos.  26  to  31  have  two  debits  or 
credits.  The  memoranda  of  the  transaction  are  given  in  the  form  to  be  used 
in  the  explanatory  part  of  the  journal  and  should  be  copied  by  the  student 
word  for  word,  with  the  exception  that  abbreviations  may  be  used.  After 
copying  the  memoranda,  he  can  complete  the  entry. 

DIRECTIONS.  Take  a  folded  sheet  of  journal  paper  and  page  it  1,  2, 
3,  and  4.    Enter  the  work  as  explained  above. 


64  PROGRESSIVE  BUSINESS   ACCOUNTING 

TRANSACTIONS.  Jan.  1.  II.  Bradford  began  business,  investing  cash 
$5,000. 

2.  Bought   of  Geo.   Adams  on  account,  Mdse.   per  bill   amounting   to 
$487.20. 

3.  Bought  of  Henry  Johnson  for  cash,  Mdse.  per  bill,  $520.60. 

4.  Bought  of  Kalph  Henry,  giving  in  payment  a  demand  note,  Mdse. 
per  bill,  $600. 

5.  Sold  to  Peter  Minkler  on  account,  Mdse.  per  bill,  $129.60. 

6.  Sold  to  Talbott  &  Co.,  for  cash,  Mdse.  per  bill,  $537.80. 

7.  Sold  to  Peterson  &  Adams,  receiving  in  payment  their  demand  note, 
Mdse.  per  bill,  $400.50. 

8.  Paid  George  Adams,  cash  to  apply  on  account,  $300. 

9.  Received  of  Peter  Minkler,  cash  in  payment  of  his  bill  of  5th,  $129.60. 

10.  Paid  Ralph  Henry,  cash  in  full  of  his  note,  $600. 

11.  Received  of  Peterson  &  Adams,  cash  in  full  of  their  note,  $400.50. 

12.  Paid  George  Adams,  cash  for  balance  to  his  credit,  $187.20. 

13.  Bought  of  Acme  Fuel  &  Ice  Co.,  a  book  of  ice  tickets  for  use  in 
store,  paying  cash,  $10. 

14.  Bought  of  Edwards  &  Co.  a  bill  of  furniture  for  use  in  office,  paying 
cash,  $27.80. 

15.  Bought  of  Richards  &  Lane,  on  account,  coal  for  fuel,  as  per  their 
bill,  $30.75. 

16.  Bought  of  John  Woodley,  as  a  speculation,  paying  cash.  Lot  #3 
in  Block  #29  of  Central  City  for  $350.     (Debit  L.  3,  B.  29,  Central  City.) 

17.  Bought  of  Wm.  Roberts,  for  cash,  one  wagon  for  use  in  delivery 
of  Mdse.,  paying  $110. 

18.  Sold  to  Henry  Grayson,  on  account,  Mdse.  per  bill,  $700. 

19.  Sold  to  Walter  Everson,  on  account,  Mdse.  per  bill,  $345.25. 

20.  Henry  Grayson  settles  his  account  by  giving  his  30-day  note  for 
the  amount,  $700. 

21.  Bought  of  J.  M.  Cushman,  on  account,  Mdse.  per  bill,  $429.80. 

22.  Sold  to  K.  Garmore,  Mdse.  per  bill  $120,  receiving  in  payment  a 
horse  for  use  of  the  business. 

23.  Settled  J.  M.  Cushman 's  credit  of  $429.80  by  deeding  to  him  Lot 
#3  in  Block  #29  of  Central  City  at  same  valuation.  (Credit  the  account 
debited  in  Jan.  16.) 

24.  H.  C.  Bradford,  proprietor,  withdrew  cash  $2,000  from  his  invest- 
ment account. 

25.  Paid  bill  of  Wright  &  Ames  for  an  addition  to  the  building  owned 
by  the  firm,  $942.70.     (Debit  Real  Estate.) 

26.  Bought  of  Henry  Coleman,  for  $6,000,  property  to  be  known  on  the 
books  as  "Maplewood  Farm,"  giving  in  payment  cash  $1,000,  and  a  note 
drawing  6%  interest  for  $5,000. 

27.  Sold  George  Dunning,  for  $7,000,  the  Maplewood  farm,  receiving  in 
payment  cash  $4,000,  and  a  note  drawing  6%  for  $3,000. 

28.  Paid  note  favor  Henry  Coleman,  giving  cash  for  face  of  note  $5,000, 
and  for  interest  to  date,  $1.67. 

29.  Received  cash  of  George  Dunning  in  payment  of  his  note.  Face  of 
note,  $3,000.    Interest  to  date,  $1. 

30.  Paid  Courtney  &  Bliss,  their  bill  of  $591.40,  subject  to  2%  discount, 
giving  cash  $579.57.    Discount,  $11  83. 


PROGRESSIVE  BUSINESS   ACCOUNTING  65 

31.  Received  of  J.  M.  Paulson,  in  payment  of  his  bill  of  $980,  cash 
$970.20,  allowing  discount  1%  $9.80. 

DIRECTIONS.  After  the  work  is  completed,  write  the  heading  as  in 
previous  exercises,  and  pass  the  work  in  for  inspection. 

QUESTIONS.  1.  What  suggestion  is  made  with  reference  to  fixing  in 
mind  doubtful  entries? 

2.  Can  the  entries  of  any  book  of  original  entry  be  placed  in  journal 
form  if  desired? 

3.  Is  L.  3,  Blk.  29,  Central  City,  a  commercial  or  a  financial  account  title  ? 

4.  Is  Real  Estate  a  commercial  account  title? 

5.  When  does  Interest  &  Discount  account  show  a  gain?    When  a  loss? 

EXERCISE  XIII 

INFORMATION  #  104.  An  order  is  a  written  form  by  which  one  party 
directs  another  party  to  deliver  to  a  party  named  in  the  order,  property  or 
cash.  It  is  assumed  that  the  party  ordering  has  with  the  party  ordered 
credit  to  cover  the  amount  called  for. 

4^  105.  A  draft  is  an  order  written  by  one  party  (the  drawer)  requiring 
a  second  party  (the  drawee)  to  pay  to  a  third  party  (the  payee)  a  certain 
sum  of  money  at  a  certain  time.  The  assumption  is  that  the  drawee  owes  the 
drawer  the  amount  of  the  draft,  and  that  the  drawer  may  have  the  drawee 
pay  this  sum  to  the  party  whom  the  drawer  names. 

For  example,  Jones  In  Boston  owes  Smith  in  Cnicago  $1,000.  Smith  in  Chicago 
owes  Brown  in  Boston  $500.  Smith  sends  Brown  a  draft  for  $500  on  Jones.  Brown, 
on  receiving  the  draft,  presents  it  to  Jones  who  pays  Brown  the  cash  $500  called 
for  and  keeps  the  draft  as  a  receipt.  By  this  means  Smith  has  paid  Brown,  without 
actually  sending  the  money,  by  taking  the  amount  from  what  Jones  owes  Smith. 

#  106.  The  draft  principle  is  used  in  several  ways  in  business  transac- 
tions. We  have,  first,  the  bank  draft,  which  is  drawn  by  one  bank  upon  an- 
other for  the  purpose  of  sending  money  away  from  the  drawer's  town.  The 
drawer  bank  has  cash  on  deposit  with  the  drawee  bank  against  which  the 
former  draws  drafts  which  are  sold  to  persons  who  wish  to  send  money  to 
some  out-of-town  person.  These  drafts  are  safely  placed  in  any  ordinary 
letter  without  registration,  as  they  are  made  payable  to  the  order  of  a  certain 
person  named  in  the  draft  and  could  not  be  collected  by  an  unauthorized 
person. 

Second,  the  merchant's  draft,  which  is  drawn  by  one  merchant  upon  an- 
other in  payment  of  a  credit  arising  frOm  sale  of  goods,  as  of  a  shipper 
who  ships  merchandise  to  a  commission  house  and  draws  against  the  house 
consigned  to,  in  order  to  secure  ready  cash  by  selling  the  draft. 

Third,  the  collection  draft,  which  wholesale  houses  and  others  draw  on 
delinquent  customers  to  secure  payment  of  bills  which  the  customers  have 
neglected.  Such  drafts,  although  in  the  same  form  as  merchant's  drafts, 
are  regarded  as  of  no  value  until  they  are  paid,  as  their  payment  is  not 
guaranteed  by  the  drawer. 

#  107.  The  payee  of  a  draft  need  not  present  it  in  person.  Drafts 
usually  contain  the  direction  "Pay  to  the  order  of,"  which  means  that  the 
payee  can  order  it  paid  to  any  person  desired  by  indorsing  on  the  back  the 
directions  as  to  whom  payment  shall  be  made.  A  draft  may  pass  through 
many  per.-^ons'  hands  by  being  indorsed  from  one  person  to  another  person. 
The  persons  passing  it  in  this  way  are  called  indorsers. 


66  PROGRESSIVE  BUSINESS   ACCOUNTING 

A  bank  check  is  of  the  same  nature  as  a  draft  with  this  exception,  that  a  check 
assumes  ordinarily  that  the  drawer,  drawee  and  payee  reside  at  the  same  place,  while 
a  draft  is  ordinarily  mailed  from  one  place  to  another. 

#  108.  The  note  and  check,  with  which  the  student  is  already  familiar, 
also  the  draft,  are  called  negotiable  paper,  a  kind  of  paper  that  may  be  trans- 
ferred from  one  person  to  another  by  indorsement. 

#  109  Transfer  indorsements  may  be  either  in  blank  or  in  full.  By 
indorsement  in  blank  is  meant  the  written  name  of  the  payee  across  the  back 
of  the  paper,  which  has  the  effect  of  making  it  payable  to  the  bearer,  who- 
ever he  may  be.  By  indorsement  in  full  is  meant  a  direction  in  writing  to 
pay  to  some  particular  person  or  his  order. 

ij:  110.  Drafts  are  drawn  payable  at  sight  (that  is,  when  presented  to 
the  drawee),  a  certain  number  of  days  or  months  after  sight,  or  a  certain 
number  of  days  or  months  after  the  date  of  the  draft.  When  payable  at 
sight  they  are  called  sight  drafts;  when  payable  after  sight  they  are  called 
time  drafts. 

#  111.  If  the  drawee  promised  to  pay  a  time  draft  at  maturity,  he 
accepts  the  draft  by  writing  "Accepted"  with  the  date  and  his  signature 
across  the  face  of  the  draft.  A  draft  when  accepted  becomes  to  the  acceptor 
a  note  payable  and  to  the  holder  a  note  receivable. 

#  112.  Banks  are  the  regular  agents  for  the  collection  of  all  varieties 
of  drafts.  If  a  holder  of  a  draft  in  one  place  desires  it  presented  to  tho 
drawee  in  another  place  he  will  leave  the  draft  with  his  banker,  who  will 
forward  it  to  a  bank  located  in  the  drawee's  city.  The  latter  bank  will 
collect  the  cash  called  for  and  make  returns.  Thus  drafts  on  any  town  can 
be  presented  and  collected  through  the  banks.  If  the  drafts  are  cash  items 
(on  the  face  of  them  collectible  at  once)  the  bank  first  receiving  the  draft 
ordinarily  cashes  it  at  once  and  makes  collection  afterward.  Sometimes  a 
charge  is  made  for  doing  this.  If  it  is  a  collection  item,  the  bank  will 
forward  as  explained  above  and  pay  the  person  for  whom  collected  after  the 
collection  is  made. 

#  113.  The  business  man  who  desires  to  send  money  out  of  town  can 
purchase  of  his  banker  a  bank  draft  which  is  payable  in  the  place  desired. 
The  bank  charges  a  small  fee  called  exchange  for  this  service  in  addition  to 
the  face  of  the  draft. 

#  114.  The  business  man  who  draws  time  drafts  on  customers  f re- 
quently  sells  these  drafts  before  they  mature  to  a  bank  in  order  to  obtain 
the  ready  cash.  The  bank  deducts  a  certain  per  cent  from  the  face  of  the 
draft  called  discount,  and  pays  the  seller  the  difference. 

EXPLANATION.  In  this  exercise,  journal  entries  with  reference  to 
drafts  will  be  made.  The  forms  of  drafts,  acceptances,  etc.,  are  given  in 
Set  B  as  they  are  used,  where  they  may  be  found.  The  entries  are  not  a 
continuous  record  of  any  business,  but  for  the  sake  of  a  correct  form  are  to 
be  dated  beginning  with  Feb.  1st.    Use  a  half  sheet  of  journal  paper. 

TRANSACTIONS.  Feb.  1.  Gave  C.  S.  Huntington,  on  account,  an 
order  for  goods  amounting  to  $40  on  W.  B.  Lamb. 

Debit  C.  P.  Huntington,  the  receiving  account;  credit  W.  B.  Lamb,  the  giving 
account. 

2.  Drew  on  Thurston  &  Co.  for  $500  at  sight  and  sent  the  draft  to 
"W.  B.  Collins  for  credit. 


PROGRESSIVE   BUSINESS   ACCOUNTING  67 

3.  Our  60-clay  draft  for  $624.50  on  Carson  &  Son  has  been  returned 
by  them  accepted. 

4.  Seymour  Eaton  presents  A.  A.  Caldwell's  order  for  goods  on  us 
amounting  to  $12.80  and  we  have  sold  him  the  goods  as  per  bill. 

5.  We  have  accepted  and  returned  to  Henry  Parker  his  draft  on  us 
at  30  days,  on  account,  for  $300. 

6.  Received  cash  of  Carson  &  Son,  in  payment  of  their  acceptance 
previously  received,  $624.50. 

7.  J.  J.  Dolliver  has  indorsed  to  us  on  account  a  30-day  acceptance 
which  he  holds  against  P.  Minkler  for  $350. 

8.  Paid  by  check  a  sight  draft  on  us  for  $75,  drawn  by  E.  E.  Rehard 
in  favor  of  Samuel  Paulson. 

9.  Paid  our  acceptance  favor  Henry  Carson,  in  cash,  $300. 

10.  We  are  notified  by  our  bank  that  an  acceptance  against  Cass  & 
Dale  for  $450,  left  for  collection,  has  been  paid  and  placed  to  our  credit. 

11.  Our  bank  returns  accepted  a  30-day  draft  for  $225  against  William 
Clute,  on  account,  left  for  presentation  to  drawee. 

12.  Henry  Parker  remits,  on  account,  a  sight  draft  on  Paul  Davis  for 
$378.40  which  we  have  presented  to  the  drawee  who  has  placed  the  amount 
to  our  credit. 

13.  Drew  a  collection  draft  on  J.  S.  Paull  for  $80.50  and  left  it  at  the 
bank  for  presentation. 

This  requires  a  memorandum  only,  as  no  values  have  been  passed  until  the  draft 
is  accepted  or  paid.  The  memo,  of  a  sight  draft  drawn  should  always  be  carried  to  the 
ledger  account. 

14.  Received  notice  from  the  bank  that  the  J.  S.  Paull  collection  of 
$80.50  has  been  paid,  and  that  the  amount,  less  a  collection  charge  of  25  cts., 
has  been  placed  to  our  credit.     (Debit  Cash  and  Expense.     Why?) 

15.  Received  credit  at  the  bank  for  S.  Benington's  acceptance,  our 
favor,  $400,  left  for  collection,  less  charges,  50  cts. 

16.  Sold  to  the  bank,  acceptance  Henry  Close,  our  favor,  for  $800, 
receiving  credit  for  face  less  discount  $12.  (Debit  Cash  and  Interest  & 
Discount.    Why?) 

17.  The  bank  has  given  us  credit  for  our  sight  draft  on  American  Imple- 
ment Co.  for  $300,  less  a  collection  charge  of  75  cts. 

18.  Discounted  at  bank  acceptance  of  Paul  Richards,  our  favor,  for 
$175,  receiving  credit  $172.42;  discount  $2.58. 

19.  Received  of  Perry  Peterson,  on  account,  J.  P.  Colgrove's  acceptance, 
his  favor  indorsed  to  us,  $186.75,  for  which  we  allow  him  credit  $185,  deduct- 
ing $1.75  Interest  &  Discount. 

20.  Bought  a  bank  draft  for  $200,  paying  in  addition  to  face,  20  cts. 
for  Exchange,  and  sent  same  to  Henny  Buggy  Co.  for  credit. 

21.  Bought  a  bank  draft  for  $730,  and  exchange  75  cts.  Sent  draft  to 
St.  Louis  Paper  Co.  in  payment  of  our  acceptance,  their  favor,  for  same 
amount. 

DIRECTIONS.  After  completion  of  entries  and  full  memoranda,  submit 
your  work. 

QUESTIONS.     1.     AVhat  is  an  order? 

2.  What  is  a  draft? 

3.  Name  three  ways  in  which  the  draft  principle  is  used. 

4.  Define  drawer,  drawee,  and  r>ayee. 

5.  Define   indorser. 


68  PROGRESSIVE  BUSINESS   ACCOUiNTING 

6.  What  is  meant  by  the  term  negotiable  paper? 

7.  Define  sight  draft ;  time  draft. 

8.  Define  indorsement  in  blank ;  indorsement  in  full. 

9.  How  is  a  draft  accepted? 

10.  How  are  drafts  collected? 

11.  What  is  a  cash  item  as  applied  to  drafts? 

12.  When  is  a  draft  a  collection  item? 

13.  What  is  the  usual  method  of  sending  cash  by  mail? 

14.  What  ledger  title  is  used  to  indicate  accepted  drafts  by  the  acceptor? 

15.  How  does  a  bank  check  differ  in  use  from  a  draft? 

EXERCISE  XIV 

INFORMATION  #  115.  Persons  invest  in  business  not  only  cash,  but 
any  other  kinds  of  value  they  may  possess.  Frequently  several  kinds  of 
property  are  invested.  When  such  is  the  case,  an  account  is  opened  with 
each  part  invested,  and  the  proprietor  is  credited  with  their  sum. 

#  116.  Frequently  the  proprietor  has  debts  to  pay  which  are  included 
as  liabilities  of  the  business.  When  such  is  the  case,  the  liabilities  are  cred- 
ited to  the  appropriate  accounts  and  the  proprietor  is  debited  with  their  sum. 

:^117.  The  difference  between  the  resources  and  the  liabilities  included 
in  the  proprietor's  investment  is  his  net  worth  and  should  be  placed  to  his 
credit. 

4^  118.  Frequently  a  large  number  of  accounts  or  notes  receivable,  or 
accounts  or  notes  payable  are  entered  in  the  investment.  When  such  is  the 
case,  the  titles  of  the  accounts  are  not  entered  in  the  journal,  but  are  grouped 
and  the  accounts  are  opened  in  the  ledger  from  a  list  which  should  accom- 
pany the  inventories  of  other  property. 

EXPLANATION.  This  exercise  presents  to  the  student  a  number  of 
opening  entries  to  be  journalized  but  not  posted.  The  first  one  will  be  dated 
Feb.  22,  and  those  following  may  be  numbered  consecutively  from  22  upward. 

DIRECTIONS.  Page  a  half  sheet  j-ournal,  and  enter  each  investment  as 
given.  Remember  that  each  is  assumed  to  belong  to  a  separate  business; 
i.  e.,  that  no  entry  has  any  connection  with  the  other  entries. 

TRANSACTIONS.  Feb.  22.  Henry  Patterson  opens  a  grain  and  feed 
business  at  158  Quincy  St.,  investing  the  following:  Cash,  $820.60;  Mdse. 
per  inventory,  $1,398.20;  Furniture  &  Fixtures  per  inventory,  $129.50. 

Enter  the  full  memoranda,  then  debit  the  three  accounts  mentioned  and 
credit  the  proprietor  with  their  sum. 

23.  W.  B.  Jones  begins  business  as  dealer  in  coal  and  wood,  investing 
stock  on  hand  per  inventory,  $4,291.80;  coal  yard  and  buildings,  $3,000; 
forty-eight  accounts  receivable  in  ledger  as  per  list,  $1,429.80. 

Skip  two  lines  between  opening  entries. 

24.  Thomas  Hunter  opens  a  hotel  business,  investing  cash  $2,500;  build- 
ing and  ground,  $7,500;  Furniture  &  Fixtures  per  inventory,  $3,490;  fifteen 
notes  due  from  others  as  per  list,  $2,140.60. 

25.  John  Erickson  begins  a  farming  business,  investing  cash  $42.90; 
160  acres  of  land  and  buildings,  $12,800;  live  stock,  per  inventory,  $2,140; 
machinery  and  tools,  $742.60. 


PROGRESSIVE  BUSINESS   ACCOUNTING 


69 


26.  Conrad  Oliver  opens  a  grocery  store,  investing  as  follows:  Cash, 
$300;  building  and  grounds,  $2,750.  He  owes  the  following  to  be  paid  out 
of  the  business:    Note  due  the  bank,  $600. 

27.  Henry  Ahlman  begins  the  hardware  business,  investing  cash,  $492.81 ; 
stock  of  goods  per  inventory,  $6,291.83;  Furniture  &  Fixtures  per  inventory, 
$320.80;  sundry  notes  receivable  per  list,  $2,942.80.  He  owes  sundry  notes 
per  list  $1,291.80,  and  sundry  accounts  per  list  $1,692.41. 

28.  H.  A.  Smith  begins  a  dry  goods  business,  investing  cash  $1,205; 
stock  of  goods,  $7,390.40;  sundry  accounts  receivable,  $500.59.  He  owes 
sundry  notes  payable  $3,491.60,  and  sundry  accounts  payable  $2,691.49. 


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DIRECTIONS. 
QUESTIONS. 


Head  the  exercise  and  pass  it  in  for  inspection. 

1.     May  a  person  invest  more  than  one  kind  of  property 
in  business? 

2.  When  different  resources  are  invested,  what  account  is  credited? 

3.  "When  both  resources  and  liabilities  are  invested,  how  is  proprietor's 
credit  found? 

4.  How  are  open  accounts  entered  in  an  investment? 

5.  How  are  notes  receivable  and  notes  payable  entered? 

EXERCISE  XV 

INFORMATION  #  119.  A  partnership  is  an  association  of  two  or  more 
persons  in  one  business.  Each  contributes  some  value  to  the  business  and 
each  shares  in  the  gain  or  loss. 


70  PROGRESSIVE  BUSINESS  ACCOUNTING 

:#:  120.  The  relations  of  each  partner  to  the  firm  should  be  clearly  stated 
in  a  written  contract  between  the  partners  called  agreement  of  co-partnership. 
This  contract  should  specify  the  amounts  contributed  by  each,  the  amount 
of  time  to  be  given  by  each  to  the  business,  the  manner  of  the  division  of 
profits,  and  the  other  matters  which  concern  their  legal  relations. 

#  121.  Ordinarily,  each  partner  has  power  to  bind  the  other  in  firm 
contracts,  each  is  liable  personally  for  the  debts  of  the  entire  firm,  a  relation 
of  trust  exists  between  the  partners,  so  that  it  may  be  said  that  it  is  unwise 
for  any  person  to  join  business  interests  with  persons  in  whom  there  is  any 
lack  of  confidence,  or  with  whom  there  is  no  positive  agreement. 

#  122.  Beginning  a  partnership,  the  property  invested  by  each  should 
be  charged  to  the  account  to  which  it  belongs  as  in  any  other  opening  entry, 
and  the  partners  contributing  should  be  credited  with  the  total  value  of  their 
investment.  If  liabilities  of  any  partner  are  assumed  by  the  firm,  the  partner 
bringing  the  liability  should  be  debited  and  the  accounts  representing  the 
liability  should  be  credited. 

#  123.  After  investments  are  entered,  the  books  are  conducted  as  in 
any  business  until  they  are  to  be  closed. 

#  124.  At  closing,  the  losses  and  gains  of  the  business  are  carried  to 
the  Loss  &  Gain  account  and  the  net  gain  is  there  divided  among  the  partners 
in  the  proportion  agreed  upon.  An  entry  is  made  for  each  partner  in  the 
Loss  &  Gain  account.  The  sum  of  these  entries  equals  the  net  gain  or  loss. 
The  account  is  then  balanced,  and  the  net  gain  or  loss  entries  are  posted  to 
the  opposite  side  of  the  partners'  accounts. 

EXPLANATION.  This  exercise  is  to  give  the  form  for  opening  and 
closing  partnership  books.  The  commercial  transactions  are  simple  and  few, 
so  that  the  journal  and  ledger  are  the  only  books  required. 

DIRECTIONS.  Prepare  a  half  sheet  of  journal  paper,  which  may  be 
paged  1  and  2.  A  half  sheet  of  journal,  headed  trial  balances  on  one  side 
and  statement  on  the  other,  and  a  half  sheet  of  ledger,  paged  1  and  2.  Divide 
page  1  of  the  ledger  equally  among  four  accounts:  H.  C.  Collins,  Partner; 
George  Dunn,  Partner;  Samuel  Coe,  Partner;  and  Loss  &  Gain.  Divide  page 
2  equally  among  seven  accounts:  Cash,  Merchandise,  Real  Estate,  Furni- 
ture &  Fixtures,  Expense,  Notes  Receivable,  and  Notes  Payable. 

TRANSACTIONS.  Nov.  1.  H.  C.  Collins,  George  Dunn,  and  Samuel 
Coe  have  this  day  formed  a  partnership  under  the  firm  name  of  Collins, 
Dunn  &  Coe,  for  the  purpose  of  engaging  in  the  furniture  and  decorating 
business.  H,  C.  Collins  invests  Cash,  $529.40;  Merchandise  per  inventory, 
$6,521.80;  Furniture  &  Fixtures  per  inventory,  $725.  George  Dunn  invests 
a  store  building  and  lot  valued  at  $8,800.  The  firm  assumes  payment  of  his 
note  favor  W.  H.  Dorr  for  $1,000.  Samuel  Coe  invests  cash,  $4,000,  and  a 
note  against  C.  B.  True  for  $1,500.  The  firm  assumes  a  note  given  by  him 
to  Allison  &  Co.  for  $800. 

The  conditions  of  the  partnership  are  given  in  detail  in  articles  of  co- 
partnership, a  copy  of  which  is  in  the  hands  of  each  partner. 

Enter  above  in  the  journal,  referring  to  the  model  form.  Post  entries 
to  the  ledger. 

Nov.  5.     Paid  cash  for  sundry  expenses  per  bill,  $87.50. 

17.     Bought  of  Grand  Rapids  Furniture  Co.,  Mdse.  for  cash,  $2,951.80. 

19.  Paid  freight  bill  of  invoice  above,  $32.59.  (Charge  Mdse.  for  pay- 
ments of  freight  on  merchandise  received.) 


PROGRESSIVE   BUSINESS   ACCOUNTING 


71 


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30.     Sold  J.  B.  Elliott,  for  cash,  merchandise  per  bill  rendered,  $1,329.68. 

Dec.  2.     Paid  cash  for  insurance  of  building  and  merchandise,  $118. 

19.  Keceived  cash  for  merchandise  sold  to  the  Palace  Hotel  Co.,  $7,462.40. 

20.  Sold  the  building  and  lot  owned  by  the  firm  to  M.  C.  Remington, 
receiving  in  payment  cash  $2,000  and  notes  for  $8,000. 

DIRECTIONS.     Dec.  31.     Take  a  trial  balance  before  closing. 

Make  a  statement  of  the  business.  The  statement  will  not  differ  in 
arrangement  from  the  form  given  at  close  of  set  A,  except  that  the  final 
division  of  the  net  gain  among  the  partners  should  be  in  the  form  given  here- 
with. According  to  the  contract,  the  gains  and  losses  of  the  business  are 
to  be  divided  among  partners  as  follows:  H.  C.  Collins,  2/5,  George  Dunn, 
2/5,  Samuel  Coe,  1/5.  Inventories  are  as  follows:  Merchandise  $2,850, 
Real  Estate  none.  Furniture  &  Fixtures  $700,  Expense  none,  other  accounts 
at  face. 


72 


PROGRESSIVE   BUSINESS   ACCOUNTING 


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PROGRESSIVE   BUSINESS   ACCOUNTING 


73 


Close  the  ledger.  The  gains  and  losses  are  closed  into  Loss  &  Gain 
account  as  before.  The  net  gain  is  divided  and  carried  to  the  partners' 
accounts  as  shown  in  the  model  form. 

Take  a  trial  balance  after  closing  under  date  Jan.  1.  Record  it  below 
the  trial  balance  previously  taken. 

Pin  the  work  in  the  order  journal,  ledger,  trial  balance  and  statement, 
place  heading  at  top,  and  submit  it  for  inspection. 

QUESTIONS.     1.     Define  partnership. 

2.  What  is  meant  by  agreement  of  co-partnership? 

3.  "What  can  you  say  of  the  power  of  one  partner  to  bind  the  others 
with  reference  to  contracts? 

4.  How  are  the  opening  entries  in  a  partnership  made? 

5.  How  does  the  closing  of  partnership  books  differ  from  the  closing 
of  the  books  of  a  sole  proprietor? 

Model  Journal  Entry  for  Closing  a  Consignment  Account 


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74  PROGRESSIVE   BUSINESS   ACCOUNTINa 


SET  B 

BUSINESS  PRACTICE 

EXPLANATION.  You  are  to  form  a  partnership  or  co-partnership  with 
George  A.  Finney  for  the  purpose  of  conducting  a  business  as  implement 
dealers  and  grain  buyers  and  shippers  under  the  firm  name  of  (student)  & 
Finney.  You  are  to  contribute  your  cash  on  hand.  George  A.  Finney  con- 
tributes a  stock  of  implements  which  he  now  has  on  hand,  a  lease  for  the 
office  and  warehouse  now  occupied.  The  firm  assumes  sundry  book  accounts 
which  he  owes.  Finney  is  to  contribute  in  cash  enough  to  make  the  invest- 
ments equal.  It  is  agreed  that  you  shall  conduct  the  business,  receiving 
for  services  a  salary  of  $200  per  month.  All  losses  and  gains  are  to  be  shared 
equally  between  the  partners. 

DIRECTIONS.  Prepare  books  for  use  as  follows:  Journal,  cash  and 
trial  balances  will  be  a  book  of  16  pages.  Use  pages  1,  2,  3,  and  4  for  journal ; 
6  to  9  for  cash,  and  the  remainder  for  trial  balances  and  statements.  The 
purchase  book,  sales  book,  notes  receivable  book,  and  inventories  will  require 
16  pages.  Use  pages  1  to  7  for  merchandise  sales  book,  8  and  9  for  notes 
receivable,  10  and  11  for  grain  purchase  book,  and  12,  13  and  14  for  inventories. 
For  convenient  reference,  write  at  the  upper  left  corner  on  heading  line  the 
names  of  Journal,  Cash,  Purchase,  Sales,  Notes  Receivable,  on  all  the  pages 
assigned  for  these  books.  The  ledger  will  be  a  book  of  10  pages  and  index. 
Divided  into  general  accounts,  pages  1  to  6 ;  accounts  payable,  pages  7  and  8 ; 
customers'  accounts,  pages  9  and  10.  Give  general  accounts  one-half  page 
each,  with  exception  of  Notes  Receivable,  which  will  take  two-thirds  of 
page  6,  leaving  the  remainder  for  Notes  Payable.  Give  personal  accounts 
one-third  page  each. 

TRANSACTIONS.  B  1.  The  student  and  George  A.  Finney  form  a  co- 
partnership on  the  terms  outlined  in  the  explanation  above.  Invest  your 
cash  on  hand,  $6,000. 

The  investment  of  George  A.  Finney  follows: 

Merchandise:     3    Cutler    Co.  Nar.    Tr.    Wagons  and  Dumps  @  $59.15; 

3  Top  Boxes,  12  in.,  @  $4;  2  Henny  A8  Surreys  @  $92;  4  Studebaker  #108 
Wagons,  box  seat,  @  $46;  1  Illinois  Buggy  Co.  #512  R.  Wagon,  blue  cloth 
trimmings,  @  $70 ;  1  New  Steinway  Wagon,  3i4xlO  H.  T.  @  $59.50 ;  5  New 
Steinway  Wagons,  31/4x10,  truck  3%  in.,  @  $58;  6  New  Steinway  Wagons. 
31/4x10,  truck  3  in.,  @  $53 ;  1  N.  S.  Handy  Truck,  3  in.,  @  $28 ;  4  Collinswood 
Mounted  Stackers  @  $40 ;  6  Linn  Grove  Push-off  Rakes  @  $17.50 ;  8  Moline 
Plows,  N6,  @  $13.20 ;  2  Moline  Plows,  N7,  @  $15.20 ;  3  Prairie  Queen  Breakers, 
14  in.,  @  $13.40;  2  Prairie  Queen  Breakers,  16  in.,  @  $16;  4  Shaker  Diggers 
@  $13;  1  Pipe  Bar  Harrow,  90th  1/2  in.,  @  $12.40;  4  Flex.  Harrows,  120th, 
16  ft.  cut,  @  $14.60;  12  Moline  Sulkies  N116  @  $47.80;  3  Moline  Gangs  N128 
(a)  $59.75;  5  Moline  Cultivators  A17  @  $15.50;  7  Moline  Cultivators  RA32 
@  $24.60;  1  Moline  Clod  Crusher,  8  foot,  @  $21.60;  5  Cedar  Gate  Co.  #8 
Gate,   mesh  bottom,   @   $3.70;   3   American   Ideal  Binders   AS291   @   $105; 

4  Adams  &  Co.  #603  Plush  Robes  @  $4.25;  2  Adams  &  Co.  #217  Manitoba 
Plush  Robes  @  $4.80;  1  Adams  &  Co.  #369  Beverly  P.  Robe  @  $6.50;  7  Allen 


PROGRESSIVE  BUSINESS   ACCOUNTING  75 

#4  Drills  @  $12.90;  2  Allen  #13  Dbl.  Wheel  Hoe  @  $7;  8  sets  Kipple  #110 
Harness  @  $38;  5  sets  Kipple  #112  Harness,  1%-in.  traces,  @  $41;  1  doz. 
Kipple  #17  Collars  for  $29.50  per  doz. ;  1  doz.  Kipple  #461  Hitch  Straps, 
%  in.,  for  $2.40  per  doz. ;  1  Champion  Steam  Thresher  and  attachments, 
$1,960;  1  Freeport  Steam  Thresher  and  attachments,  $2,180. 

Expense:  6  months'  rent  prepaid,  $480;  Books  and  stationery  for  office 
use,  $30. 

He  owes  the  following  firms  on  open  account,  which  are  assumed  by  the 
firm: 

Moline  Plow  Co.,  Moline,  111 $1,291.60 

Cutler  Wagon  Co.,  Chicago 729.58 

Henny  Mfg.   Co.,   Waterloo,   Iowa 527.89 

Wisconsin  Buggy  Co.,  Sheboygan,  Wis 158.70 

South  West  Saddlery  Co.,  St.  Louis 481.96 

He  is  to  invest  cash  sufficient  to  make  a  net  credit  of  $6,000. 

DIRECTIONS.  Enter  an  inventory  of  merchandise  on  page  10  of  in- 
ventories. Enter  expense  inventory  and  list  of  accounts  on  page  11.  Then 
find  how  much  cash  should  be  contributed  by  Mr.  Finney  to  give  him  the 
credit  agreed  upon. 

Draw  up  articles  of  co-partnership  in  duplicate,  embodying  the  foregoing 
facts  and  agreements.  Attach  your  signature  to  both  and  secure  Mr.  Finney's 
signature.     Leave  one  copy  with  him  and  retain  one  for  your  own  files. 

Write  a  receipt  in  his  favor  for  the  amount  and  collect  the  cash.  Sign 
the  receipt  (student  and  Finney).  Make  an  opening  journal  entry.  Post 
cash  debits  to  the  cash  book.  Open  in  the  ledger  accounts  with  partners  on 
page  1,  Mdse.  and  Expense  on  2;  post  the  accounts  payable  to  pages  7  and  8 
of  the  ledger  from  the  inventory  book.  Remember  that  posting  these  item 
by  item  from  the  inventory  book  has  the  same  effect  upon  the  ledger  balance 
as  posting  their  total  from  the  journal  would  have.  Check  "Accounts 
Payable"  in  journal  to  show  that  the  posting  has  been  done.  These  balances 
should  show  in  explanation  column  of  ledger  "Bal.  per  list  page  11." 

After  completion  of  the  posting,  take  a  trial  balance  and  record  it  on 
page  8  of  trial  balances. 

B  2.  Open  an  account  at  the  bank  and  place  all  cash  on  hand  to  the 
credit  of  (student)  &  Finney,  the  name  you  will  use  in  signing  checks. 

Use  the  pass  book  you  have  in  your  outfit.  The  bank  will  provide  you 
with  a  check  book  and  deposit  tickets. 

B  3.  Sell  Elmer  McKeown,  on  his  four-months'  note,  1  Moline  Sulky 
Plow,  Nil  6,  for  $62.50. 

Enter  in  sales  book.  No  account  will  be  kept  with  customers  unless  mentioned. 
Bill  on  short  bill  head,  fill  out  loose  note  drawing  6%  from  'date.  Receipt  the  bill 
and  secure  his  signature  to  the  note.  Record  the  note  in  the  notes  receivable  book 
(see  model),  giving  it  the  No.  1.  Place  the  number  on  the  note  in  red  ink,  place  the 
note  in  the  file  for  Notes  Receivable.  Post  sales  book  to  debit  of  Notes  Receivable 
in  ledger.  No  use  need  be  made  of  explanation  column,  as  a  full  record  of  the  note 
has  been  made. 

B  4.     Sell  William  Hauser,  on  two-months'  note,  at  6%: 

1  Moline  8  ft.  Clod  Crusher  for  $26. 

1  set  Kipple  #110  Harness  for  $45. 
(Proceed  as  in  B3.     Give  the  note  No.  2.) 


76 


PROGRESSIVE  BUSINESS   ACCOUNTING 
NOTES 


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B  5.    'Sell  Ezra  Hoffman,  on  his  three-months'  note  at  6%. 
1  New  Steinway  Wagon,  3i/4xlO  H.  T.,  for  $78. 

1  Pipe  Bar  Harrow,  90th  1/2  in.,  for  $15.50. 

2  Kipple  #17  Collars,  22  in.,  for  $6.50. 
(Proceed  as  before.) 

B  6.     Sell  Roy  Hodges,  for  cash: 

1  Adams  &  Co.  #603  Plush  Robe  for  $8.00. 

2  Kipple  #461  Hitch  Straps  for  $  .50. 
1  Top  Box,  12  in.,  for  $5.00. 

(Receipt  the  bill,  collect  cash,  post  to  cash  book.) 

B  7.  Sell  Walter  Bye,  for  cash,  1  New  Steinway  Wagon,  31/4x10  H.  T., 
for  $67.50 ;  1  Shaker  Digger  for  $16. 

B  8.  Sell  Harry  Bahr,  on  account,  1  set  Kipple  #112  Harness,  1'%-in. 
traces,  for  $41 ;  4  Kipple  Collars,  4/20,  for  $10. 

(Open  the  account  on  page  9.) 

B  9.  Sell  F.  J.  Mixdorf,  on  account,  1  Moline  Gang  N128  for  $70; 
1  Henny  A8  Surrey,  $92;  2  Hitching  Straps  for  50  cts. 

B  10.  Sell  Earl  Arthur,  1  Champion  Steam  Thresher  for  $2,500;  2  sets 
Kipple  #110  Harness  (S>  $38 ;  receiving  in  payment  cash  $576  and  four  notes 
Eor  $500,  payable  in  1,  2,  3,  and  4  months  from  date  with  interest  at  6%. 

Fill  out  four  notes  for  Arthur's  signature,  also  a  bill  which  receipt  and 
deliver  when  you  receive  the  cash  and  signed  notes  called  for.  This  entry 
will  be  posted  from  the  sales  book  to  the  debit  of  Cash,  and  of  Notes  Receiv- 
able. Where  a  sales  book  entry  is  to  be  posted  to  the  debit  of  two  or  more 
accounts,  the  posting  titles  should  be  shown  as  in  the  form  below. 


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B  11  ^end  $500  per  draft  to  Moline  Plow  C(i.,  Moline|  111.,  proceeding 
as  follows:  Write  a  check  payable  to  ''Chicago  Draft,  our  order,  $500  Exch. 
50  cts."  This  check  is  to  be  passed  in  at  the  bank  in  payment  of  a  draft  for 
$500  and  for  exchange  on  the  draft  50  cts.  Show  on  the  stub  of  the  check 
book  that  Moline  Plow  Co.  is  to  be  charged  the  face  of  the  draft,  and 
Expense  the  amount  of  the  exchange.     After  you  have  purchased  the  draft, 


PROGRESSIVE  BUSINESS   ACCOUNTING 
RECEIVABLE 


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indorse  it  in  full,  write    a    letter   like    the    model    form,    and    place  it  in  a 
properly  directed  envelope. 

Transfer  from  the  stub  of  the  cheek  book  to  the  credit  side  of  the  cash 
book  two  entries,  one  debiting  Moline  Plow  Co.,  the  other  debiting  Expense. 
Check  mark  the  stub  to  show  that  entry  has  been  made.    Post. 


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B  12.     Purchase  a  draft  $300,  Exchange  30  cts,  as  above,  and  send  it  to 
the  South  AVest  Saddlery  Co.  for  credit  on  account. 


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78  PROGRESSIVE  BUSINESS   ACCOUNTING 

B  13.  Order  by  mail  of  the  Simplex  Separator  Co.,  817  Monroe  St., 
Chicago,  5  No.  6  Tubular  Hand  Separators,  billed  on  usual  terms.  Write 
letter  as  in  moJel,  page  77,  and  make  a  memo,  of  the  order  in  the  journal. 
In  this  set,  orders  for  supplies  are  to  be  written  on  the  usual  letter-heads,  and 
a  memo,  of  the  order  made  in  the  journal.  In  the  machinery  business,  many  of  the 
order  blanks,  as  well  as  other  contracts,  notes,  etc.,  are  required  to  be  on  the  manu- 
facturer's printed  forms,  so  that  it  is  generally  only  the  unusual  or  small  orders 
that  are  to  be  filled  on  hurry  demand  during  the   season. 

B  14.     Order,  by  mail,  of  the  Ayers  Horse  Blanket  Co.,  Cumberland  & 
3d  Sts.,  Philadelphia,  Pa.,  by  fast  freight,  on  usual  terms: 
2  doz.  Virginia  Blankets. 
2  doz.  Brigand  Blankets, 
2  doz.  Vanity  Blankets. 
2  doz.  Mogul  Blankets. 
2  doz.  Essex  Blankets. 
2  doz.  Queen  Blankets. 
1  doz.  Jumbo  Blankets. 
4  doz.  Storm  King  Blankets. 
Do  not  overlook  making  a  memo,  of  the  order  in  the  journal. 
B  15.     Sell  Edward  Alderman,    for    his    two-months'    note,  no  interest 
until  maturity,  6%  thereafter:     1  Illinois  Buggy,  #512,  blue  cloth  trimming, 
for  $95. 

Is  the  note  #8  recorded  in  the  notes  receivable  book? 
B  16.     Sell  Claude  Sawyer,  on  his  note  at  60  days,  with  6%  interest  from 
date,  the  items  listed  below.     Require  also  the  signature  of  J.  P.  Hess,  who 
is  willing  to  sign  the  note  as  an  accommodation  to  Sawyer. 
1  Cutler  Wagon,  Nar.  Tr.  &  Dump,  for  .$74.50. 
1  set  Kipple   #112  Harness,  1%  trace,  for  $56.00. 
1  set  Kipple  Collars  2/21  for  $6.50. 
1  Allen  #4  Drill  for  $16.50. 
B  17.     Sell  Paul  Landy  for  cash  $20,  and  his  30-days'  note  at  6%  for  the 
balance : 

1  Collinswood  Mounted  Stacker  for  $55, 

2  Linn  Grove  Push-off  Rakes  for  $25. 

1  New  Steinway  Wagon,  31^x10  truck  3  in.,  for  $67.50. 

B  18.  Sell  Freeman  High  for  cash  $50,  balance  on  90-day  note  at  6%, 
with  additional  signer  B.  Bodholdt. 

2  Moline  Cultivators  A17  @  $26. 

1  Cedar  Gate  #8,  mesh  bottom,  for  $5.50. 
1  Studebaker   #108  Wagon  for  $65. 
B  19.     Sell  Frank  Cotter,  receiving  in  payment  two  notes  for  equal  parts 
due  2  and  4  months  respectively,  at  6%  : 

1  Studebaker  #108  Wagon  for  $65. 
1  Linn  Grove  Push-off  Rake  for  $25. 
1  Flexible  Bar  Harrow  120th  for  $18. 
1  set  Kipple  #110  Harness  for  $45. 
B  20.     Deposit  in  the  bank  all  cash  on  hand. 

EXPLANATION.  In  this  set  the  student  will  buy  grain  for  shipment, 
paying  market  prices.  Grain  is  bought  in  many  small  lots  and  shipped  by 
the  car  load  to  the  general  grain  markets  or  to  mills  located  in  towns  and 
cities  throughout  the  country.  A  ledger  account  will  be  kept  with  Grain, 
and  the  purchase  book  will  be  kept  for  grain  purchases.    Purchases  of  mer- 


PROGRESSIVE  BUSINESS   ACCOUNTING 


79 


chandise,  being  few  in  number  in  this  business,  will  be  entered  in  the  journal. 
The  total  of  the  grain  purchase  book  will  therefore  be  charged  to  Grain,  not 
Merchandise  account. 

INFORMATION  #  125.  The  transfer  of  the  real  property  is  of  so  great 
importance  that  a  special  instrument  called  a  deed  is  used  to  evidence  the 
conveyance.  A  deed  is  a  sealed  instrument  used  to  convey  real  estate.  It  is 
signed  or  acknowledged  in  the  presence  of  a  justice  of  the  peace,  notary 
public  or  other  officer  empowered  to  certify  to  the  genuineness  of  the 
instrument.  After  its  delivery,  the  grantee  should  have  the  county  recorder, 
or  the  public  official  whose  duty  it  is  to  make  a  public  record  of  all  titles 
in  land  in  a  given  county,  record  it.  This  record  is  official  notice  of  the 
change  of  ownership.  Before  buying  lands,  the  intending  purchaser  should 
have  prior  records  thoroughly  examined  by  a  competent  person,  as  an  attor- 
ney-at-law  or  an  authorized  abstract  company,  to  make  sure  that  the  grantor 
has  good  legal  title  to  the  property  to  be  conveyed.  Deeds  and  conveyances 
are  of  ditferent  kinds.  The  two  common  forms  of  deed  are  the  quit  claim 
deed  and  the  warranty  deed.  In  the  former  the  grantor  conveys  his  interest, 
whatever  that  may  be.  In  the  latter  the  grantor,  in  addition  to  conveying 
his  interest,  undertakes  to  warrant  that  the  title  is  good  and  complete. 

B  21.  Buy  of  Stephen  Brown  and  his  w^ife,  Lillian  Brown,  lots  3  and  4, 
in  block  #39  of  the  recorded  plat  of  your  city,  on  which  a  grain  elevator 
stands  as  part  of  the  property,  for  cash  $3,800. 

Fill  out  a  warranty  deed  (see  legal  forms),  and  secure  the  signatures 
of  the  grantors,  acknowledged  by  a  notary  public.  On  receipt  of  the  deed, 
write  a  check  for  $3,800,  payable  to  Stephen  Brown,  and  deliver  it.  Charge 
Real  Estate. 

Write  a  check  favor  Claude  Parker,  county  recorder,  for  $1,  and  hand 
it  to  him  to  pay  the  recording  fee  for  the  deed.  The  deed  is  left  with  this 
official  for  record.     Charge  Expense. 

When  the  deed  is  returned,  see  that  the  date  of  record  is  plainly  indorsed 
on  the  back.  File  the  deed  with  miscellaneous  business  papers.  Enter  in 
cash  book  and  open  account  with  Real  Estate  on  page  3  of  ledger. 

B  22.     Buy  of  William  Weaver,  giving  check  in  payment: 
2  loads  of  wheat,  58  bu.  and  64  bu.,  @  81  ets. 

Enter  in  grain  purchase  book  as  shown  in  the  model  entry.  Make  memo, 
in  lower  left  corner  of  the  check  for  Weaver,  thus:  "122  bu.  wheat  at  81  cts. " 
When  transferring  from  check  stub  to  cash  book,  do  not  use  the  title  column 
as  the  posting  to  the  debit  of  Grain  account  will  be  taken  from  the  total  of 
the  grain  purchase  book. 


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B23.  Buy  of  F.  E.  Lucas,  paying  by  check,  1  load  wheat,  49  bu.,  @ 
81  cts. 

B  24.  Buy  of  F.  J.  Mixdorf,  to  apply  on  his  account,  571/2  bu.  wheat 
@  81  cts. 

Enter  the  purchase  and  post  to  credit  of  F.  J.  Mixdorf 's  account  on 
page  9  of  ledger. 


80 


PROGRESSIVE  BUSINESS   ACCOUNTING 


B  25.     Submit  a  ticket  as  in  set  A,  showing 

1.  Amount  of  cash  invested. 

2.  Amount  of  cash  received  since  investment. 

3.  Amount  of  cash  paid  since  investment. 

4.  Amount  of  cash  balance. 

5.  Amount  of  merchandise  sales. 

6.  Amount  of  grain  purchases. 

Balance  the  cash  book  and  compare  the  balance  with  balance  on  check 
stub. 

B  26.  Receive  invoice  in  response  to  order  sent  to  Simplex  Separator 
Co.  (The  articles  billed  have  arrived  and  have  been  taken  from  freight 
house  and  placed  in  the  warehouse  by  the  Curtis  Transfer  Co.) 

Observe  that  the  invoice  shows  the  price  at  which  you  are  to  sell  the 
items  $115.  From  this  is  deducted  the  trade  discount,  25%,  which  is  your 
profit,  leaving  a  net  amount  to  credit  of  the  shipper  of  $431.25.  Observe  that 
in  selling  the  Simplex  Separator,  it  may  be  necessary  to  exchange  it  for  Lulu 
Separators,  with  which  the  Simplex  is  in  competition.  If  such  exchange  is 
necessary,  the  Simplex  Separator  will  allow  you  credit  for  the  exchanged 
article  as  shown  on  the  invoice. 

Enter  Merchandise  purchases  in  the  journal  in  this  set.  Voucher  num- 
bers are  not  given  to  incoming  bills  in  this  business  for  the  reason  that  the 
settlement  of  accounts  is  governed  by  special  contracts,  and  in  some  cases  is 
made  annually. 

INFOHMATION  #  126.  Railroad  companies  render  expense  bills  for 
the  transportation  charges  on  goods  shipped  by  freight.  These  expense  bills 
are  written  on  forms  prepared  by  the  railroad  company.  It  is  customary 
for  the  local  transfer  company  when  delivering  in-freight  to  take  up  the 
expense  bill,  add  their  drayage  charges  to  it,  and  present  all  in  one  amount 
to  the  consignee  (party  to  whom  the  freight  is  shipped)  for  payment. 

:j^  127.  The  in-freight  and  drayage  charges  are  debited  to  the  account 
to  which  the  property  received  is  charged,    . 

B27.  The  Curtis  Transfer  Co.  present  the  bill  for  freight  and  drayage 
on  invoice  received  in  B26.  $4.02. 

Pay  by  check  in  their  favor,  enter,  and  post. 

^. 


/<Pttff^'y^-'n''<^--yt^  /^<32to?t^<»-L4e-^. 


PROGRESSIVE   BUSINESS   ACCOUNTING  81 

B  28.  Receive  invoice  in  response  to  order  sent  to  Ayers  Horse  Blanket 
Co.  (The  invoice  checks  with  the  goods  delivered  from  freight  house).  The 
invoice  calls  for  payment  by  60-day  note.  "Write  a  note  in  favor  of  the 
shipper  for  the  amount  of  their  bill  for  the  given  time,  without  interest. 
Record  the  note  in  the  notes  payable  book  and  number  it  1 ;  enter  it  in 
the  journal  to  the  credit  of  Notes  Payable  (there  will  be  no  ledger  account 
with  this  firm)  ;  write  a  letter  similar  to  the  model  on  page  80,  and  mail 
letter,  invoice,  and  note  accordingly. 

B  29.  The  Curtis  Transfer  Co.  present  railroad  expense  bill,  drayage 
charges  attached,  for  the  last  delivery  of  merchandise.     Pay  by  check. 

B  30.  Send  Henny  Mfg.  Co.,  by  mail,  your  note  at  30  days  drawing  6%, 
in  full  of  account.  Write  a  letter.  Record  in  notes  payable  book,  make 
journal  entry. 

B  31.     Sold  Vernal  Arthur,  on  account : 

1  #6  Tubular  Hand  Separator  #59783  for  $115. 
1  Prairie  Queen  Breaker,  14  in.,  for  $16.50. 
1  American  Ideal  Binder  AS291  for  $105. 
B  32.     Received  of  Vernal  Arthur,  to  apply  on  purchase  price  of  hand 
separator  sold  him,  1  Lulu  Separator,  for  which  allowed  on  account,  $25. 

Enter  in  journal.     Debit  Simplex  Separator  Co.,  credit  Vernal  Arthur. 
B  33.     Sold  H.  L.  Howard,  on  account: 

1  #6  Tubular  Hand  Separator  #59784  for  $115. 

1  Shaker  Digger  for  $16. 

1  Collinswood  Mounted  Stacker  for  $55. 

1  Linn  Grove  Push-off  Rake  for  $25. 

B  34.  Sold  to  sundry  cash  purchasers  the  following  items.  Enter  in 
the  sales  book  and  carry  total  to  the  cash  book. 

2  Virginia  Blankets.  80x84,  for  $6.00. 

1  Cutler  Nar.  Tr.  Wagon  and  Dump  for  $74.50. 

1  314x10  Steinway  Hand  Truck,  3  in.,  for  $38. 

2  Mogul  Blankets,  80x84,  for  $8.50. 
1  Moline  Plow  N6  for  $17. 

1  Prairie  Queen  Breaker,  16  in.,  for  $18.25. 

1  Essex  Blanket,  84x90,  for  $4. 

1  #6  Tubular  Hand  Separator  #59785  for  $115. 

2  Moline  Cultivators  RA32  for  $63. 

1  Cedar  #8  Gate,  mesh  bottom,  for  $5.50. 

2  Adams  &  Co.  #217  Manitoba  Robes  for  $15. 
2  Jumbo  Blankets,  90x96,  for  $9. 

2  Kipple  Horse  Collars,  22  in.,  for  $6.50. 

B  35.  Richard  Hall  makes  arrangements  with  us  to  purchase  his  wheat 
at  market  price.  We  are  to  give  him  credit  on  open  account  as  received. 
Open  his  account  in  ledger,  page  10. 

He  sends  today  5  loads,  54,  56,  61,  49,  and  52  bu.  respectively,  for  which 
give  him  credit  at  82  cts.  per  bu. 

B  36.  Buy  of  Robert  Weatherwax  2  loads  of  wheat,  58  and  42  bu. 
paying  by  check  at  82  cts. 

B  37.     Buy  of  G.  F.  Foley  137  bu.  wheat  at  81  cts.,  paying  by  check. 

B  38.  Sell  Arthur  Diekman  and  Henry  Diekman,  on  their  five  joint 
notes  maturing  in  1,  2,  3,  4,  and  5  months  respectively,  at  6%,  one  Freeport 
Steam  Thresher  and  attachments  for  $2,625,  ■ 


82  PROGRESSIVE  BUSINESS  ACCOUNTING 

B  39.  Send  a  draft  to  Cutler  Wagon  Co.  for  $200,  exchange  20  cts.,  to 
apply  on  account.     (See  Bll.) 

B  40,  Richard  Hall  delivers  1,039  bu.  wheat  for  which  give  him  credit 
at  811/2  cts. 

B  41.     Sell  Richard  Hall,  on  account: 

2  Studebaker  #108  Wagons,  box  seat,  for  $130. 
2  Top  Boxes,  12  in.,  for  $10. 
B42.     Sell  to  Harry  Shaw,  receiving  cash  $100  and  his  note  at  30  days 
drawing  6%  for  the  balance : 

1  American  Ideal  Binder  for  $130. 

1  Adams  #369  Plush  Robe  for  $9.50. 

2  Hitching  Straps  for  60  cts. 

1  #6  Tubular  Hand  Separator  #59756  for  $115. 

INFORMATION  #128.  A  part  payment  of  a  note  is  acknowledged  by 
the  holder's  indorsement  written  on  the  back  of  the  note.  Indorsements 
may  be  in  cash  or  in  other  value.  The  indorsements  of  a  part  payment 
should  be  written  across  the  note  at  the  "end  opposite  to  the  one  on  which 
transfer  indorsements  are  written.  The  indorsements  of  payment  are  written 
at  the  reverse  side  of  the  right  end  of  the  paper;  the  transfer  indorsements 
are  written  at  the  reverse  side  of  the  left  end  of  the  paper. 

B  43.  According  to  agreement,  Harry  Shaw  delivers  a  second-hand 
Lulu  Separator,  for  which  he  is  allowed  $25  to  apply  on  his  note  given  in  B  42. 

Indorse  on  the  note  words  in  the  following  form:  ''Aug.  2,  1909. 
Received  to  apply  on  within,  1  Lulu  Separator  for  $25."  Write  opposite 
the  amount  of  the  note  in  the  notes  receivable  book,  above,  not  on,  the  blue 
line  on  which  the  note  is  recorded,  words  in  the  following  form:  "Aug.  2, 
1909.  Indorsed  $25."  When  a  final  payment  of  any  note  is  made,  the 
annotation  is  written  on  the  blue  line. 

Make  the  correct  journal  entry  for  this  and  post. 

B  44.  Collect  cash  $20  from  Paul  Landy  in  part  payment  of  our  note 
#10  against  him. 

Indorse  on  note  thus:  ''Aug.  2,  1909.  Indorsed  cash  $20."  Show 
payment  in  notes  receivable  book,  enter  in  cash  book,  and  post. 

B45.  Received  of  Richard  Hall  788  bu.  wheat,  for  which  give  him 
credit  at  82  cts. 

B  46.     Pay  to  Richard  Hall,  check  to  balance  account. 

B  47.     Deposit  the  cash  on  hand. 

B48.  Send  Wisconsin  Buggy  Co.  a  bank  draft  for  $100  to  apply  on 
account. 

B  49.  Buy  of  William  Putnam,  329  bu.  wheat  @  821/2  cts.,  giving  check 
in  payment. 

B  50.  Balance  the  cash  book,  and  leave  your  bank  pass  book  at  the 
bank  to  be  balanced.  Open  an  account  with  Grain  on  page  3  of  ledger  and 
post  the  total  grain  purchases  to  this  account. 

Post  total  merchandise  sales  to  the  credit  of  Mdse. 

Enter  a  trial  balance  on  page  8  of  trial  balance  book. 

Submit  a  ticket  showing 

1.  Cash  balance. 

2.  Merchandise  sales  to  date. 

3.  Grain  purchases  to  date. 

4.  Number  of  bushels  of  wheat  on  hand. 


PROGRESSIVE   BUSINESS   ACCOUNTING  83 

INFORMATION  #  129.  Grain,  cotton,  live  stock,  vegetables,  fruits, 
poultry  and  other  commodities  are  purchased  in  the  communities  where 
produced  and  sent  in  quantity  to  commission  houses  in  the  larger  business 
centers  to  be  sold  on  the  market.  The  price  that  they  will  bring  cannot  be 
definitely  stated  until  the  goods  arrive  at  the  place  of  sale.  Goods  sent 
thus  to  commission  merchants  are  called  shipments  by  the  shipper  (con- 
signor). A  ledger  account  is  opened  with  the  property  sent  to  any  one  firm. 
For  example,  if  a  shipment  is  sent  to  Goodyear  Commission  Company  for 
sale  on  your  account  and  risk,  you  should  open  an  account  with  "Shipments 
to  G.  Com.  Co."  in  the  ledger.  Under  this  general  title  each  shipment  should 
be  given  a  few  lines  space  and  should  be  referred  to  as  #1,  #2,  etc.,  refer- 
ring to  the  order  in  which  they  were  sent.  These  divisions  of  the  general 
shipment  account  should  be  charged  with  the  cost  of  the  shipment  and  with 
any  subsequent  charges  paid  by  the  consignor  pertaining  to  the  shipment. 
When  the  consignee  has  sold  the  shipment,  he  makes  a  report  called  an 
account  sales  for  the  consignor.  This  account  sales  shows  the  price  and 
amount  secured  for  the  goods  shipped,  together  with  a  deduction  from  that 
amount,  of  the  consignee's  charges  for  services  in  handling  the  goods  and 
conducting  the  sale.  After  deducting  the  charges,  the  net  proceeds  remains. 
This  is  remitted  to  the  consignor  with  the  account  sales  by  cheek  or  is  placed 
to  his  credit  to  be  drawn  against.  The  consignor,  on  receipt  of  the  account 
sales,  credits  the  shipment  account  by  number  with  the  net  proceeds  and 
charges  the  account  indicated.  In  some  kinds  of  shipments  the  consignor 
is  allowed  to  draw  drafts  on  the  commission  house  against  the  proceeds  of 
the  shipment,  at  the  time  he  ships.  This  he  does  that  he  may  cash  the  drafts 
at  a  bank  and  thus  secure  ready  money.  In  order  to  do  this  the  shipper 
secures  from  the  railroad  company  a  bill  of  lading  (see  4^130),  which  is 
evidence  that  the  shipment  has  been  made;  and  sends  this  bill  of  lading  to 
the  consignee,  either  in  the  letter  of  advice  or  he  may  send  it  pinned  to  the 
draft.  If  the  shipper  cashes  a  draft  against  the  shipment,  he  credits  the 
shipment  by  number  with  the  amount  of  the  draft.  In  that  case,  after  sale, 
the  consignee  remits  or  credits  the  net  proceeds  of  the  sale  after  the  amount 
of  the  draft  is  deducted.  After  full  returns,  each  shipment  account  shows 
a  loss  or  a  gain,  and  the  account  is  closed  into  the  Loss  &  Gain  account. 

#130.  A  bill  of  lading  is  a  written  contract  between  a  railroad  or  other 
common  carrier  and  a  shipper  describing  goods  received  for  shipment,  stating 
terms  of  shipment  and  to  whom  delivery  is  to  be  made.  Copies  are  kept  by 
the  shipper  and  the  agent  of  the  transportation  company.  It  is  presented 
by  the  consignee  to  show  title  to  the  goods  shipped. 

B  51.  Consign  to  the  Gregory  Commission  Co.  one  car  load,  600  bu., 
wheat  for  sale  on  our  account  and  risk,  freight  unpaid,  by  Commercial 
Railway  Co. 

Receive  a  bill  of  lading  from  the  railway  Co.  Write  a  letter  of  advice 
like  the  form  on  page  84,  and  make  a  journal  entry  debiting  "Shipt.  Gregory 
Com.  Co.  #1,"  and  crediting  Grain,  600  bu.  wheat  @  82  cts.  Open  the 
new  ledger  account  at  top  of  page  4.    Observe  the  model  on  page  73  closely. 

B  52.  Consign  to  Mead  &  Beach,  Chicago  commission  merchants,  for 
sale  on  our  account  and  risk,  1,330  bu.  wheat,  freight  prepaid,  by  Railway. 
(Open  account  with  "Shipments  to  Mead  &  Beach.")  Pay  freight  as  shown 
on  bill  of  lading,  by  check.  Charge  the  shipment  to  Mead  &  Beach  #1  with 
the  wheat  at  82  cts.  per  bu.  through  the  journal,  and  the  freight  paid  through 
the  cash  book. 


84 


PROGRESSIVE   BUSINESS   ACCOUNTING 


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B53.  The  Oakdale  Milling  Co.,  Oakdale,  Neb.,  offer  you  4  cents  above 
market  price  for  No.  2  wheat  billed  f.  o.  b.  (free  on  board)  your  station. 
Ship  them  one  car  load,  620  bu.,  at  86  cts.  and  charge  their  account.  This 
is  not  a  consignment  but  a  sale.  It  must  be  entered  in  the  journal,  not 
sales  book,  because  merchandise  sales  only  are  entered  in  the  sales  book- 
Secure  bill  of  lading  and  send  with  bill.  Open  Oakdale  Milling  Co.  account 
on  page  10  of  your  ledger. 

INFORMATION  #  131.  A  consignment  account  is  an  account  kept  with 
goods  sent  by  others  for  sale  on  their  account  and  risk.  The  commission 
houses  to  whom  you  sent  shipments  in  B51  and  B52  will  keep  consignment 
accounts  with  your  shipments.  Manufacturers  who  offer  new  products  for 
which  there  is  a  doubtful  market  may  be  unable  to  sell  their  goods  to  dealers. 
But  dealers  frequently  take  such  goods  on  consignment  (on  sale),  that  is, 
with  the  understanding  that  they  are  not  to  be  remitted  for  until  sold.  The 
consignor  is  not  credited  when  the  goods  arrive,  but  is  credited  with  sales 
as  they  are  made.  At  the  close  of  the  season,  if  any  articles  consigned  remain 
unsold,  they  are  to  be  accounted  for  and  may  be  returned  to  the  consignor 
or  kept  until  sold  as  agreed  upon, 

4^  132.  The  consignments  account  with  any  firm  should  show  a  memo, 
of  goods  received,  each  consignment  being  numbered  as  with  shipments  in 
the  credit  explanation  column.  Sales  as  made  should  be  posted  to  the  credit 
of  the  consignment  to  which  they  belong,  and  fully  explained.  When  any 
one  consignment  is  closed,  the  amount  due  should  be  remitted  and  charged, 
thus  balancing  the  account.     See  model  on  page  73. 

#  133.  Goods  consigned  may  be  entered  on  a  regular  form  bill,  terms 
''on  sale,"  and  a  price  may  be  placed  on  the  items  sent.  This  may  be  the 
net  price  or  the  list  price.  If  they  are  thus  billed  in  memo,  at  net  price,  the 
dealer  will  make  his  profit  by  selling  above  that  price.  If  they  are  billed  at 
list  or  selling  price,  the  dealer  will  make  his  profit  by  deducting  a  com- 
mission from  that  price. 

B54.  Receive  invoice  from  Waterloo  Gasoline  Engine  Co.,  who  have 
sent  you  two  items  on  sale.  Open  an  account  in  ledger,  page  5,  with  "Con- 
signments from  W.  Gas.  Eng.  Co.,"  and  in  the  credit  side  enter  the  date, 
the  number  of  the  consignment  and  explanation  "2  R.  E.  Engines  @  $90." 


PROGRESSIVE  BUSINESS   ACCOUNTING 


85 


B  55.  Pay  Curtis  Transfer  Co.,  by  check,  $1.10  for  delivering  the  engines 
from  freight  house.     (Charge  Const.  W.  G.  E.  Co.  #1.) 

B  56.  Sell  A.  C.  Hoenig,  for  cash  $90,  one  R.  E.  Gasoline  Engine  from 
this  consignment.  Bill  as  usual,  but  do  not  enter  in  sales  book,  for  a  con- 
signment is  to  be  credited,  not  Merchandise.  Make  the  entry  in  the  cash 
book,  and  post  to  credit  of  Const.  W.  Gas.  Eng.  Co.  #1. 

B57.  Sell  to  E.  Yearsley,  on  his  30-day  note  at  6%,  1  R.  E.  Engine 
from  Const.  W.  Gas.  Eng.  Co.  #1  for  $90. 

Enter  in  journal  and  post. 

INFORMATION  #  134.  Commission  is  an  allowance  made  for  buying 
or  selling  property  belonging  to  other  persons.  It  is  usually  computed  at  a 
certain  per  cent  of  the  amount  bought  or  sold.  The  commission  account  in 
the  ledger  shows  on  the  credit  side  a  gain,  representing  the  amount  that  the 
operations  in  commission  have  given  to  the  business. 

#  135.  When  a  consignment  is  all  sold,  close  the  account  by  debiting 
against  it  the  commission  earned,  and  any  other  charges  connected  with  it. 
The  difference  between  these  charges  and  the  amount  of  sales  is  called  net 
proceeds,  which  should  be  remitted  to  the  consignor,  or  credited  to  his  per- 
sonal account  according  to  agreement. 

B58.  As  Const.  W.  Gas.  Eng.  Co.  #1  is  sold,  close  the  account.  The 
entire  sales  amount  to  $180.  Your  commission  at  25%  is  $45.  This  with  the 
drayage  charge  of  $1.10  already  made  leaves  the  net  proceeds  $133.90. 

Buy  a  bank  draft  for  this  amount,  giving  the  check  for  20  ets.  additional 
exchange. 

Make  a  journal  entry  as  in  model,  and  after  posting,  foot  and  rule 
Const.  W.  Gas.  Eng.  Co.  #1,  for  it  should  be  in  balance. 

Inclose  the  draft  in  a  letter  like  the  model  reporting  the  sale. 


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INFORMATION  #  136.  Consignment  accounts,  as  well  as  all  other 
accounts  requiring  itemized  statements,  should  show,  in  the  explanatory  col- 
umns of  the  ledger,  memoranda  sufficient  to  make  a  clear  explanation  of  all 
entries.  If  this  is  not  done,  time  and  patience  will  necessarily  be  expended 
in  looking  up  the  original  entries. 


66  PROGRESSIVE  BUSINESS   ACCOUNTING 

B  59.  Receive  an  invoice  of  shipment  from  the  Columbus  Automobile 
Co.     The  Curtis  Transfer  Co.  have  delivered  the  items  listed  in  the  invoice. 

EXPLANATION.  By  arrangement  with  a  traveling  repi^esentative  of 
this  company,  your  firm  has  agreed  to  receive  on  consignment  3  Columbus 
High  Wheel  Runabouts  to  be  sold  at  $550  each.  You  are  to  deduct  from  the 
proceeds  of  sales  all  necessary  charges  connected  therewith,  including  freight, 
repairs,  and  a  commission  of  20%  on  gross  sales.  At  settlement,  you  are  to 
remit  cash  for  the  proceeds,  or  you  may  remit  not  over  one-half  of  the  pro- 
ceeds in  good  notes  indorsed  by  your  firm. 

Open  an  account  with  "Consignments  from  Columbus  Automobile  Co." 
and  enter  memo,  of  goods  received  as  in  previous  consignment. 

B  60.  Pay  freight  and  drayage  bill  presented  by  the  Curtis  Transfer 
Co.  and  charge  to  Const.  C.  A.  Co.  #2. 

B  61.     Buy  of  E.  J.  Gilleas  443  bu.  wheat  @  84  cts.,  paying  by  check. 

INFORMATION  #  137.  Business  men  when  short  of  immediate  cash 
usually  borrow  money  from  a  bank,  giving  their  short  time  notes.  These 
advances  by  the  bank  are  called  either  loans  or  discounts.  When  the  bank's 
customer  gives  his  interest-bearing  note  for  which  the  bank  allows  him  the 
face  of  the  note  in  cash  or  credit,  the  transaction  is  called  a  loan. 

When  the  bank's  customer  presents  his  non-interest-bearing  note  and 
the  bank  deducts  from  the  face  the  interest  for  the  term,  and  gives  him  cash 
or  credit  for  the  proceeds  (remainder  after  deducting  the  interest),  the 
transaction  is  called  a  discount. 

In  addition  to  getting  cash  by  loan  or  discount  on  his  own  notes,  the 
business  man  frequently  discounts  at  the  bank  notes  that  he  holds  against 
other  persons. 

When  a  loan  or  discount  is  made,  the  borrower,  if  he  has  an  account  at 
the  bank,  should  enter  the  note  or  notes  on  a  deposit  ticket  and  make  a  total 
of  the  proceeds.  On  receiving  this,  the  bank  teller  will  credit  the  amount 
as  in  any  other  deposit.  When  the  note  becomes  due,  it  should  be  paid  by 
check. 

B  62.  Write  a  note  at  thirty  days  in  favor  of  your  bank,  for  $1,000, 
without  interest,  and  record  it  in  the  Notes  Payable  book.  Enter  it  on  a 
deposit  ticket  showing  the  face  less  discount  for  thirty  days  at  6%,  and 
deposit  the  proceeds.  Make  a  journal  entry  debiting  Cash,  Interest  &  Disc't, 
crediting  Notes  Payable.  Post,  enter  the  deposit  in  the  check  book,  and 
show  the  bank  balance. 

B  63.  The  commission  company  to  whom  you  sent  shipment  in  B51,  send 
you  an  account  sales  and  a  bank  draft  for  the  proceeds  of  the  sale  of  the 
grain. 

After  examination  of  the  report  and  draft,  if  found  correct,  enter  the 
amount  of  the  draft  to  the  credit  of  shipments  to  Gregory  Commission  Co. 
4^1,  enter  in  cash  book,  place  the  draft  in  the  cash  drawer,  and  post  the 
entry. 

After  the  entry  is  posted,  you  will  observe  by  comparing  the  debit  and 
credit  amounts  of  this  shipment,  that  the  result  is  a  gain  to  you  of  $11.75. 
Enter  in  the  debit  side  of  the  shipment  account,  in  red  ink,  the  date,  "Loss  & 
Gain  $11.75,"  foot  and  rule  the  account.    Open  an  account  with  Loss  &  Gain 


PROGRESSIVE   BUSINESS   ACCOUNTING 


87 


on  the  lower  one-third  of  page  5,  and  post  the  Loss  &  Gain  entry  to  the 
credit  of  this  account,  using  the  explanation  "Shipt.  G.  C.  Co.  #1." 

B  64.  Ship  to  the  Gregory  Commission  Co.  a  car  load  of  wheat,  580  bu., 
at  83  cts.,  for  sale  on  your  account  and  risk,  freight  unpaid.  Follow  routine 
given  in  B51. 

Turn  to  Shipt.  G.  C.  Co.  account  in  ledger,  and  below  the  ruling,  enter 
a  memo,  of  the  shipment  ^2  as  shown  in  the  model  form. 

B  65.  The  commission  firm  to  whom  you  sent  a  shipment  in  B52,  send 
you  an  account  sales  showing  that  they  have  sold  the  grain  and  have  placed 
the  proceeds  to  your  credit  subject  to  sight  draft.  Make  a  journal  entry 
debiting  Mead  &  Beach  (personal  account),  and  crediting  Shipt.  M.  &  B.  :^1, 
and  post.    Open  the  account  with  Mead  &  Beach  at  foot  of  page  10. 

Close  Shipt.  M.  &  B.  #1  into  Loss  &  Gain  as  you  closed  Shipt.  G.  C. 
Co.  #1. 

B  66.  Send  by  mail  a  sight  draft  on  Mead  &  Beach  in  favor  of  the 
Cutler  Wagon  Co.  for  the  balance  due  the  latter  firm  (read  Infor.  ^106-2d). 

The  amount  of  the  draft  may  be  found  by  reference  to  the  ledger  account. 


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VALUE   RECEIVED  AND  CHARGE  TO  ACCOUNT  OF 


Fill  the  stub  and  draft  as  shown  (see  model),  write  a  letter  (see  model), 
make  the  journal  entry,  and  mail  the  remittance.     Post  the  entry. 


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B  67.  Draw  at  sight  on  Oakdale  Milling  Co.  for  the  amount  of  their 
account.  Deposit  the  draft,  less  a  discount  of  $1.00,  in  the  bank.  (Read 
Infor.  #112.)     Journalize,  post,  enter  the  deposit  in  check  stub. 


88  PROGRESSIVE  BUSINESS   ACCOUNTING 

B  68.  The  Southwest  Saddlery  Co.,  of  St,  Louis,  have  drawn  on  you 
to  balance  your  account.  The  draft  has  been  forwarded  to  your  bank  for 
collection.  Call  at  the  bank,  and  after  seeing  the  draft,  compare  the  amount 
with  the  balance  to  the  credit  of  that  company  in  your  ledger.  If  the  amount 
is  correct,  write  a  check  in  favor  of  your  bank  for  the  face  and  a  collection 
charge  of  30  cts.  which  your  bank  adds  for  their  services.  Enter  in  cash 
book  (two  titles)  and  post.  See  that  the  sight  draft  has  been  marked  "paid" 
by  the  bank,  then  file  it  as  a  receipt. 

B  69.  Pay,  as  in  B68,  the  sight  draft  drawn  on  you  by  the  Wisconsin 
Buggy  Co.  to  balance  account.     The  exchange  added  to  the  draft  is  15  cts. 

B70.  The  Waterloo  Gasoline  Engine  Co.  sends  you  a  second  consign- 
ment (see  B55),  as  per  invoice  of  shipment.  The  items  called  for  have  been 
delivered  at  warehouse  by  the  Curtis  Transfer  Company,  to  whom  pay  cur- 
rency for  drayage,  $2.75. 

B71.  Bought  of  Richard  Hall,  on  account  (see  B35),  five  loads  of  wheat, 
58,  56,  64,  59,  and  62  bu.  respectively,  84  cts.  per  bu. 

B  72.  Sell  to  Herbert  Jordon,  for  cash  $200  and  his  90-day  note  at  6% 
$350,  one  Columbus  Runabout  from  Const,  from  Columbus  Automobile  Co. 
#1.     Enter  in  journal.     Why?     See  B56  and  B57,  also  Infor.  #85. 

B  73.     Sell  to  F.  J.  Mixdorf ,  on  account : 

1  Cutler  Nar.  Tr.  Wagon  &  Dump  for  $74.50. 

1  Moline  Plow  N6  for  $17. 

1  Cedar  Gate  #8,  mesh  bottom,  for  $5.50. 

Enter  in  sales  book,  page  4. 

B74.     Sell  to  Vernal  Arthur,  on  account: 

1  American  Ideal  Binder  AS291  for  $105. 
1  Allen  #13  Dbl.  Wheel  Hoe  for  $10.50. 
1  Henny  A48  Surrey  for  $115. 

INFORMATION  #  138.  It  is  well  to  form  a  habit  of  completing  all 
entries  and  computations  correctly  before  proceeding  with  work.  A  first- 
class  bookkeeper  will  make  a  correct  trial  balance  on  the  first  addition  more 
frequently  than  he  will  miss  making  it.  For  those  who  sometimes  fail  in 
this  respect,  a  few  rules  for  detecting  errors  in  trial  balances  are  given: 

1.  Make  the  trial  balance  as  complete  and  perfect  as  possible,  using 
pencil  footings. 

2.  On  a  loose  slip  of  paper  compute  the  amount  of  the  discrepancy, 

3.  If  you  are  conscious  of  a  tendency  to  make  several  errors  in  the 
amount  of  posting  since  last  trial  balance,  check  the  posting.  Begin  with 
the  journal  and  see  that  all  debit  entries  are  posted  to  the  ledger  on  the 
debit  side.  As  each  entry  is  compared,  plr.ce  a  small  neat  pencil  check  mark 
on  the  double  ruling  before  it  in  both  journal  and  ledger.  Next,  check  journal 
credits,  cash  book  debits  and  credits,  and  continuing  check  all  books  of 
original  entry  with  the  accounts.  If  no  error  is  discovered,  review  all  the 
amounts  supposed  to  be  posted  and  see  if  any  are  not  checked.  An  entry 
not  checked,  may  be  some  item  posted  a  second  time  by  mistake.  If  at  any 
time  part  of  the  desired  amount  is  found,  deduct  that  part  from  the  amount 
first  sought  so  that  the  exact  difference  may  be  alwaj^s  in  mind. 

4.  If  the  books  do  not  balance  when  checked  back,  there  may  be  an 
error  in  addition.     Review  all  footing,  and  transferring  of  amounts. 


PROGRESSIVE  BUSINESS   ACCOUNTING  89 

If  you  think  that  you  have  probably  made  only  one  error,  apply  the 
following : 

5.  Look  for  one-half  of  the  amount  desired,  in  the  greater  side  of  the 
ledger.  You  may  have  posted  an  item  to  the  wrong  side,  which  would  result 
in  a  difference  in  the  trial  balance  of  double  the  amount  mis-posted. 

6.  If  the  discrepancy  is  divisible  by  9,  look  for  a  reversal  of  figures 
in  posting  or  in  transferring  amounts.  For  example,  $95  posted  for  $59  would 
make  the  trial  balance  out  of  balance  the  difference  between  them,  $36,  a 
number  divisible  by  9.  $529.61  posted  for  $569.21  would  make  a  discrepancy 
of  $39.60,  a  number  also  divisible  by  9.  Likewise  any  reversal  of  figures 
will  cause  a  discrepancy  divisible  by  9. 

7.  If  the  discrepancy  is  a  single  figure  with  any  number  of  ciphers,  as 
1,  10,  1,000,  500,  90,000,  it  would  be  well  to  review  the  footings.  An  error 
in  addition  is  probable. 

8.  Persons  who  make  numerous  mistakes  have  discovered  other  ways 
of  finding  them.  If  the  bookkeeper  would  form  the  habit  of  understanding 
and  doing  all  his  work  correctly  as  he  proceeds,  he  would  have  no  mistakes 
to  discover, 

B  75.  Balance  the  cash  book  and  prove  the  balance  to  be  correct.  Carry 
the  balance  to  top  of  page  6. 

Foot  and  post  the  Merchandise  sales  book. 

Foot  and  post  the  Grain  purchase  book. 

Make  a  trial  balance  and  record  it  on  page  9  of  trial  balances. 

Deposit  all  cash  on  hand  and  leave  the  bank  pass  book  at  the  bank  for 
balancing. 

Pass  a  ticket  to  teacher's  desk  showing: 

1.  Amount  of  cash  in  drawer. 

2.  Amount  of  cash  in  bank. 

3.  Amount  of  Notes  Receivable  on  hand. 

4.  Bushels  of  wheat  on  hand. 

5.  Bushels  of  wheat  in  shipment  not  sold. 

B76.  Sell  to  Charles  Deeming,  for  cash,  $550,  one  Columbus  Runabout 
of  Const,  from  Columbus  Automobile  Co.  #1. 

B  77.  Collect  cash  of  Harry  Bahr  in  full  of  account,  and  give  him  a 
receipt, 

B  78.  Collect  cash  of  Henry  &  Arthur  Dickman  in  full  payment  of  their 
note  (your  No.  14)  and  interest  computed  at  20  days. 

Compute  the  interest,  add  it  to  the  face  of  the  note.  Receive  the  cash, 
mark  the  note  "paid"  on  notes  receivable  book  and  on  the  face  of  the  note. 
Surrender  the  note.  Enter  in  cash  book,  crediting  two  titles,  Notes  Receiv- 
able and  Interest  &  Discount.     Post. 

B  79.     Collect  cash  of  H.  L.  Howard,  in  full  of  account,  giving  a  receipt. 

B  80.  Draw  on  Mead  &  Beach  for  the  balance  due  in  favor  of  Columbus 
Automobile  Co.,  and  remit  the  draft  (write  letter)  to  the  latter  firm  to  apply 
on  their  consignment. 

B81.  Sold  Edward  licit,  for  cash  $550,  one  Columbus  Runabout  from 
Const.  C.  A.  Co.   #1. 

B82.  Close  the  Const,  from  Columbus  Auto.  Co.  #1.  (Read  Infor. 
#136,  compare  with  B58  and  read  B59.) 

As  per  contract,  you  are  allowed  to  remit  up  to  one-half  of  your  proceeds 


90  PROGRESSIVE   BUSINESS   ACCOUNTING 

in  notes  indorsed  by  you.  You  will  send  as  a  part  of  your  remittance  for 
the  proceeds  of  the  consignment,  your  notes  receivable  Nos.  1,  2,  3,  and  21, 
which  indorse  to  them  in  full,  to  be  charged  at  face  without  reference  to 
interest.  (Do  not  forget  to  endorse  the  notes  in  full  and  mark  them  off 
the  notes  receivable  book  with  an  annotation  similar  to  this:  "Aug.  9,  1909. 
Sent  C.  Auto.  Co.  on  a/c") 

After  deducting  the  notes,  your  commission  and  the  charges  to  the 
consignment  already  made  from  the  total  credit  of  the  consignment,  pur- 
chase a  bank  draft  for  the  balance  due,  paying  for  the  draft  and  10  cts. 
exchange  by  check. 

Make  a  journal  entry,  charging  the  consignment  and  Expense,  and  cred- 
iting three  titles. 

Post  the  entry,  foot,  and  rule  the  consignment  account. 

Write  in  letter  form  an  account  sales  of  the  consignment  reporting  the 
remittance  to  balance. 

In  the  letter,  list  the  notes  by  number,  name,  and  amount.  Mail  the 
letter,  notes,  and  draft  to  the  consignor. 

B83.  Sell  to  Winnifred  Bush,  for  cash  $90,  one  R.  E.  Gasoline  Engine 
from  Const.  W.  G.  E.  Co.  #2. 

B  84.  You  have  learned  that  F.  J.  Mixdorf,  who  owes  you  a  balance 
on  open  account,  has  changed  his  residence  to  Platte,  Charles  Mix  Co.,  S.  D. 
Make  an  annotation  at  head  of  his  ledger  account,  showing  the  date  and  his 
address. 

Make  a  statement  of  his  account,  and  inclose  it  in  a  letter  to  him  urging 
immediate  payment.  State  in  letter  that  if  you  do  not  hear  from  him  at  once 
you  will  draw  on  him  at  sight  for  the  amount. 

B  85.  The  Henny  Mfg.  Co.  have  sent  to  your  bank  for  collection  your 
note  No.  2  to  them  which  may  be  considered  now  due. 

Pay  the  amount  (face  and  30  days'  interest)  by  check;  receive  the  can- 
celled note. 

Mark  date  of  payment  on  notes  payable  book;  paste  cancelled  note  to 
stub. 

B  86.  As  you  will  soon  need  a  large  amount  of  cash,  submit  to  your 
banker  the  following  notes  receivable  for  discount :  Nos.  4,  5,  6,  and  7,  Earl 
Arthur;  Nos.  15,  16,  17,  and  18,  H.  &  A.  Dickman;  No.  19,  Harry  Shaw;  No. 
20,  E.  Yearsley. 

The  banker  will  allow  you  credit  for  them  as  follows: 
For  Nos.  4,  5,  6,  and  7,  face  less  $8.33  discount. 
For  Nos.  15,  16,  17,  and  18,  face  less  $13.25. 
For  No.  19,  face  less  the  indorsement. 
For  No.  20,  face,  no  discount. 

Accept  the  offer  and  make  a  list  of  the  notes.  No.  19  should  be  listed 
at  face  less  indorsement.  Foot  the  list.  Deduct  the  discount,  and  show  the 
net  proceeds  of  the  notes. 

Indorse  in  full  each  of  the  notes  in  favor  of  the  bank. 

Make  annotation  on  notes  receivable  book  opposite  each  note  discounted, 
in  this  form:    "Aug.  10,  1909,  discounted  at  bank." 

Attach  your  list  of  notes  to  a  deposit  ticket,  and  deposit  the  proceeds. 
Make  the  book  entry. 

B  87.     Not  hearing  from  F.  J.  Mixdorf,  draw  a  sight  draft  on  him  for  the 


PROGRESSIVE  BUSINESS   ACCOUNTING  91 

amount  due  and  leave  it  at  the  bank  for  collection.  (See  Infor.  4#^106-3d.) 
A  memo,  in  ledger  account  is  to  be  made  like  the  following:  Aug.  10,  1909. 
Drew  through  bank  for  bal.,  $212.92. 

B  88.  Receive  account  sales  from  Gregory  Commission  Co.,  of  shipment 
:ff:2,  with  draft  for  net  proceeds.     (Compare  with  B63.) 

B  89.  Sell  to  Richard  Hall,  on  account,  3  R.  E.  Gasoline  Engines  @  $90, 
from  Const.  ^Y.  G.  E.  Co.  #2. 

B  90.  Draw  a  sight  draft  on  Vernal  Arthur,  at  Millerstown,  your  state, 
for  the  balance  due,  and  leave  the  draft  at  the  bank  for  collection. 

B  91.  Pay  by  check  your  Note  Payable  #3  due  the  bank.  Consider 
this  the  maturity  date  of  the  note. 

B  92.  Sell  to  Vivian  Dix,  for  cash  $90,  the  remaining  R.  E.  Gasoline 
Engine  belonging  to  Const.  W.  G.  E.  Co.  #2. 

B93.  Close  Const.  W.  G.  E.  Co.  #2  and  remit  the  proceeds.  (Refer 
to  B58.)     Exchange  on  bank  draft  is  40  cts. 

B  94.  Paul  Landy  makes  a  second  payment  of  $40  cash  on  his  note  #10. 
(Compare  with  B44.) 

B  95.  The  Ayers  Horse  Blanket  Co.  have  sent  your  acceptance  their 
favor  (Note  Payable  #1),  to  your  bank  for  collection.  Considering  it  now 
due,  pay  it  by  check. 

B  96.  The  bank  has  collected  the  sight  drafts  which  you  left  for  collec- 
tion against  F.  J.  Mixdorf  and  Vernal  Arthur.  They  have  placed  the  pro- 
ceeds to  your  credit  after  deducting  45  cts.  and  75  cts  respectively  from  the 
drafts  for  collection  charges.  Take  your  pass  book  to  the  bank  and  have 
the  teller  enter  (as  deposits)  the  proceeds  of  the  drafts  collected.  Make 
entry  and  post. 

B  97.  AVrite  a  check  in  favor  of  yourself  for  one  month's  salary,  $200. 
Charge  Expense.     Cash  the  check, 

B  98.  Deposit  all  cash  and  leave  your  pass  book  at  the  bank  to  be 
balanced. 

B  99.     Take  a  trial  balance. 

B 100.  Make  a  statement  of  the  business  and  close  the  ledger.  The 
inventories  are  given  below. 

Merchandise:  4  New  Steinway  "Wagons,  truck  3x3%,  @  $58;  5  New 
Steinway  Wagons,  truck  3  in.,  @  $53;  2  Collinswood  Mounted  Stackers  @ 
$40;  2  Linn  Grove  Push-off  Rakes  @  $17.50;  6  Moline  Plows  N6  @  $13.20; 

2  Moline  Plows  N7  @  $15.20;  2  Prairie  Queen  Breakers,  14  inch,  @  $13.40; 
1  Prairie  Queen  Breaker,  16-inch,  @  $16;  2  Shaker  Diggers  @  $13;  3  Flex. 
Pipe  Bar  Harrows  120th  @  $14.60;  11  Moline  Sulkies  N116  (S^$47.80;  2  Mo- 
line Gangs  N128  @  $59.75;  3  Moline  Cultivators  A17  @  $15.50;  5  Moline 
Cultivators  RA32  @  $24.60;  3  Cedar  Gate  Co.  #8  Gates,  mesh  bottom  @ 
$3.70;  3  Adams  &  Co.  Plush  Robes  #603  @  $4.25;  6  Allen  #4  Drills  @  $12.90; 
1  Allen  #13  Dbl.  Wheel  Hoe  (g  $7;  4  sets  Kipple  #110  Harness  @  $38; 

3  sets  Kipple  #112  Harness,  1%-inch  traces,  @  $41;  2  Collars,  #117  Kipple, 
@  $2.40;  5  Hitch  Straps,  #461  Kipple,  @  20  cts;  Goods  in  Inv.  A.  H.  B.  Co., 
less  sales,  $484.08;  1  #6  Tubular  Hand  Separator  @  $86.25. 

Grain:    Amount  on  hand,  430  bu.  wheat,  @  84  cts. 
Real  Estate :    The  real  property  bought  in  B21  is  valued  at  cost. 
Expense:     5  months'  rent  prepaid,  $400.     Stationery  on  hand,  $20. 
Notes  Receivable:  6  notes. 


92 


PROGRESSIVE  BUSINESS   AOCOUNTIInG 


Accounts  Beceivable:     One   only. 

Accounts  Payable:     Two   only. 

Enter  the  inventories  and  lists  in  pages  11  and  12  of  inventory  book. 

Make  a  statement  showing  losses  and  gains,  divided  as  agreed  upon. 

Close  the  ledger,  carrying  gains  to  partners  as  in  statement. 

Take  a  trial  balance  after  closing. 

Purchase  a  bank  draft  for  your  balance  in  the  bank  as  shown  by  your 
books,  giving  a  check  in  payment.     (The  bank  will  charge  no  exchange.) 

Leave  your  Notes  Receivable  at  the  bank  for  collection.  Request  that 
when  paid  the  proceeds  be  remitted  to  your  firm  by  draft. 

DIRECTIONS.  You  will  now  remove  the  books  of  this  set  and  examine 
each  page  carefully  to  see  that  all  has  been  done  in  correct  form.  If  satis- 
factory, pin  at  back  each  of  the  three  sets,  wiite  the  usual  heading  at  the  top. 

Make  a  neat  package  of  your  vouchers,  and  submit  all  for  inspection. 

EXERCISE  XVI 

INFORMATION  #  140,  It  has  been  shown  in  #94  that  the  property 
pertaining  to  any  accounts  may  be  listed  in  inventories.  The  totals  of  these 
inventories  are  resources  of  the  business,  and  when  the  accounts  are  closed, 
are  entered  (red  ink)  in  the  credit  side,  and  carried  (black  ink)  below  the 
ruling  to  the  debit  side  of  the  accounts  to  Avhich  they  pertain.  There  are 
also  liability  inventories.  These  consist  of  items  owed  by  the  business,  that 
have  not  been  entered  in  the  books.  Among  liability  inventories  are  found 
Interest  payable  to  others.  Expense  items  due  but  not  charged,  as  salaries 
unpaid,  taxes  unpaid,  etc. 

When  an  account  having  a  liability  inventory  is  closed,  the  liability 
inventory  is  entered  in  red  ink  in  the  debit  side  and  carried  below  the  ruling 
to  the  credit  side  of  the  account.  Some  accounts  have  both  resource  and 
liability  inventories  at  the  time  of  closing.  Both  are  to  be  entered  in  the 
same  account.  The  form  here  given  illustrates  the  closing  of  an  account 
having  both  kinds  of  inventories. 


^^^>^-Z!^--^:^g^.:^<^^<:a<^ 


#  141.  When  making  a  statement  of  the  business,  add  liability  inven- 
tories to  the  debit  footings  of  the  accounts  to  which  they  pertain. 

#  142.  A  business  may  be  in  such  a  condition  that  a  financial  state- 
ment will  show  greater  total  liabilities  than  total  resources.  When  the 
liabilities  exceed  the  resources,  the  firm  is  insolvent.  In  a  case  of  insolvency 
it  is  impossible  to  pay  all  indebtedness  out  of  the  assets  (resources)  of  the 
firm,  because  the  former  exceeds  the  latter. 

#  143.     When  insolvent,  a  firm  may   wind  up  its  affairs  by  going  into 


PROGRESSIVE  BUSINESS   ACCOUNTING  93 

bankruptcy.  The  laws  provide  that  a  bankrupt  may  distribute  all  of  his 
assets  among  his  creditors,  pro  rata,  and  thus  extinguish  their  claims  against 
him.  Bankruptcy  may  be  entered  into  voluntarily  by  the  insolvent  person 
or  he  may  be  forced  into  bankruptcy  by  one  or  more  of  his  creditors.  In 
either  ease  the  court  appoints  a  receiver  who  takes  possession  of  his  property 
and  converts  it  into  cash  for  the  benefit  of  his  creditors. 

EXPLANATION.  In  this  exercise,  the  student  will  make  two  state- 
ments of  the  business  from  partnership  books.  There  are  included  in  both 
statements  resource  and  liability  inventories.  One  of  the  statements  will 
show  the  business  in  a  solvent  condition  although  sustaining  a  net  loss.  The 
other  will  exhibit  an  insolvent  condition. 

DIRECTIONS,  Take  a  half  sheet  of  journal  paper.  Head  one  side 
"Statement  of  Brown,  Smith  &  Jones;"  head  the  reverse  side  "Statement 
of  Mason  &  Adamson."  Complete  the  statement  from  the  data.  The  ledger 
exhibits  accounts  as  follows : 

John   Brown,   Partner Dr.  $  Cr.    $4,000.00 

James  Smith,  Partner "  800.00  "       5,000.00 

Edward  Jones,  Partner "  500.00  "       3,500.00 

Cash "  329.60 

Merchandise    "     12,431.80  "       5,291.64 

Furniture   &   Fixtures "       1.829.40 

Expense    "       3,291.80 

Commission    "  "  584.92 

Interest  &  Discount "  788.90  "  129.62 

Notes  Payable    "  "       5,691.40 

Notes  Receivable   "  477.20  " 

Accounts  Payable    "  "       2,560.00 

Accounts   Receivable    "       6,308.88 

Inventories:  Mdse.  (resource)  $7,281.39;  Furn.  &  Fixt.  (resource) 
$1,525;  Expense  (resource)  $125.90,  (liability)  $55.80;  Int.  &  Disct. 
(liability)  $152.20.     (Read  Infor.  #101.) 

Losses  and  gains  are  to  be  divided  equally  among  partners.  Enter 
expense  inventories  twice  on  statement — on  resource  and  on  liability  sides, 
as  though  pertaining  to  separate  accounts. 

From  the  data  following  make  the  Mason  &  Adamson  statement: 

Frank   Mason,   Partner Dr.  $  Cr.    $2,000.00 

Richard   Adamson,   Partner "  "       2,000.00 

Cash    "  5.29  " 

Merchandise    "     15,291.80  "       7,692.89 

Furniture   &  Fixtures "       3,789.64  " 

Expense    "       2,219.87  " 

Commission    "  "  469.00 

Interest  &  Discount "  524.80  ' '  159.60 

Notes  Payable    "  "       6,581.40 

Notes   Receivable    "       1,329.47 

Accounts  Payable   "  "       5,158.00 

Accounts   Receivable    "  900.02  " 

Inventories:  Mdse.  (resource)  $5,420.69;  Furn.  &  Fixt.  (resource) 
$2,800;  Expense  (resource)  $210;  Int.  &  Disct.  (liability)  $219.40.  The 
total  resources  are  to  be  deducted  from  total  liabilities,  showing  as  the  result 
net  insolvency.    As  before,  the  partners  share  gains  and  losses  equally. 


94  PROGRESSIVE  BUSINESS   ACCOUNTING 

DIRECTIONS.  When  the  two  statements  are  complete,  both  in  form 
and  results,  head  and  submit  the  work. 

QUESTIONS.     1.     Define  the  term  liability  inventory. 

2.  How  are  liability  inventories  treated  when  closing  a  ledger  account? 

3.  To  what  footings  of  an  account  are  liability  inventories  added? 

4.  What  is  the  condition  of  a  business  when  the  total  liabilities  exceed 
the  total  resources? 

5.  Define  the  term  assets. 

6.  What  is  bankruptcy? 

7.  How  do  voluntary  and  involuntary  bankruptcy  differ? 

8.  In  the  hands  of  what  public  official  are  the  affairs  of  a  bankrupt 
placed? 

9.  By  whom  is  the  receiver  appointed? 

10.     Does  insolvency  apply  to  a  partnership  as  well  as  a  sole  propri- 
etorship ? 

EXERCISE  XVII 

EXPLANATION.  The  journal  entries  of  this  exercise  are  not  a  con- 
nected record.  They  are  transactions  such  as  one  would  be  likely  to  meet 
with  more  or  less  frequently.  The  student  should  take  time  to  make  clear 
memoranda  as  well  as  correct  titles.  This  work  is  in  the  nature  of  an  exam- 
ination, hence  spend  the  time  necessary  to  do  the  work  without  personal 
assistance. 

Use  a  double  sheet  of  journal  paper,  and  date  the  entries  beginning 
March  1. 

TRANSACTIONS.  March  1.  We  have  made  settlement  of  John  Adams' 
account.  The  balance  due  us  was  $23.40,  for  which  he  delivered  corn  (Mdse.) 
at  60  cts.  per  bu. 

2.  There  is  due  George  Hedges  $75  for  rent  of  store  building  for  March. 
Pass  this  to  his  credit  on  account. 

3.  Joshua  Collins  pays  us  cash  in  settlement  of  his  note  for  $120  and 
5  mo.  interest  at  6%. 

4.  Paid  cash  for  freight  on  invoice  of  Mdse.  received  from  Dale  &  Co., 
Chicago,  $58.20. 

5.  Charles  Conrad,  a  customer,  returns  a  sack  of  bran,  which  our  clerk 
delivered  thinking  it  to  be  a  sack  of  sugar,  for  which  we  give  credit  as  origin- 
ally charged  $6.10. 

6.  Received  of  Henry  Brunson  158  lb.  live  poultry  at  9  cts.,  for  which 
sold  him  1  brl   flour  for  $8,  and  paid  the  difference  in  cash. 

7.  Paid  by  check  to  First  National  Bank  our  note  for  $400,  and  three 
months'  interest  at  8%. 

8.  Received  of  Charles  Adamson  a  new  note  in  payment  of  his  old  note 
to  us  for  $368,  and  9  mo.  interest  at  8%. 

9.  Walter  Grossman,  owing  us  $158.70  on  account,  settled  by  delivering 
a  horse  (Live  Stock)  at  $110,  and  paying  cash  for  the  remainder  of  the 
amount. 

10.  Peter  Myron,  against  whom  we  held  a  $100  note,  delivered  7  cords  of 
wood   (Expense  account)   @  $5.50,  which  was  indorsed  on  the  note. 

11.  Collinswood  &  Co.  send  a  cash  draft  for  $196  in  payment  of  our  bill 
of  3d  for  $200,  terms  2%  10  days. 


PROGRESSIVE  BUSINESS  ACCOUNTING  95 

12.  We  send  Austin  Hardware  Co.  a  bank  draft  for  their  bill  $589.20 
less  3%.     Bank  charges  exchange  60  cts. 

13.  The  bank  reports  that  our  draft  for  $13.90  on  Porter  &  Son  has  been 
paid  and  proceeds,  after  deduction  of  25  cts.  collection,  has  been  placed  to 
our  credit. 

14.  Our  30-day  draft  on  Martinek  &  Mills,  on  account,  for  $392,  has  been 
returned  to  us  accepted. 

15.  Sundry  cheeks  and  drafts  included  in  our  bank  deposit  have  been 
credited,  less  exchange  85  cts. 

16.  Drew  a  sight  draft  against  our  credit  with  Longman  &  Co.  for 
$359.16  and  sent  it  to  Fillings  &  Wood  to  apply  on  account. 

17.  The  Illinois  Steel  Co.  have  drawn  a  draft  at  90  days  on  us,  on 
account,  for  $1,396.43.     We  have  accepted  the  draft. 

18.  Bought  a  typewriter  for  office  use,  paying  cash  $95. 

19.  Sold  A.  N.  Palmateer  Mdse.  per  bill  for  $75.80,  receiving  an 
accepted  sight  draft  on  H.  M.  Rollins  &  Co.  for  $200.90.  We  paid  cash  for 
the  difference  after  deducting  $1  discount  on  the  draft. 

20.  Mersey  &  Allen  have  set  fence  posts  around  our  farm  charging  $145, 
for  which  we  have  given  credit  on  book  account. 

21.  Received  an  account  sales  from  Gotch  Commission  Co.  and  check 
for  proceeds  of  our  shipment  No.  17  to  them  $49.28. 

22.  Closed  consignment  from  J.  S.  Coffin  No.  1.  The  entire  credit  on 
sales  made  was  $139.80.  The  charges  prior  to  closing  the  account  were 
$3.29.  Close  the  consignment  account,  allowing  5%  commission  on  gross 
sales  and  remitting  cash  for  the  proceeds. 

23.  Received  an  account  sales  from  Heinz  &  Slosser  of  our  shipment 
No.  5.     They  placed  the  proceeds  $168.90  to  our  credit. 

24.  Closed  consignment  from  Ballington  Creamery  Co.  No.  1.  Their 
credit  ou  sales  was  $269.50;  Sundry  charges  to  date,  $15.12;  our  commission 
3%,    Placed  proceeds  to  credit  of  consignor  subject  to  sight  draft. 

25.  Discounted  at  bank  note  of  Henry  Preston  our  favor  for  $149,  re- 
ceiving credit  for  the  proceeds  less  $3  discount. 

26.  Paid  our  $1,000  loan  at  the  bank,  giving  a  check  for  the  face  of  the 
note  and  98  days  interest  at  6%. 

27.  Drew  on  The  Stock  Yards  Commission  Co.  for  $2,000,  on  account,  and 
cashed  the  draft  receiving  face  less  a  collection  charge  of  $2.50. 

28.  Admitted  Amos  Young  as  a  partner  into  the  business  giving  him 
credit  for  his  invested  resources  consisting  of  Mdse.  per  invty,  $1,650.12,  Notes 
Rec.  per  list  $964.12,  and  Accounts  Receivable  per  list,  $2,169.49. 

29.  By  mutual  consent  of  partners,  John  Ferguson  withdrew  from  the 
business.  We  transferred  to  him  in  settlement  of  his  interest  in  the  business 
amounting  to  $6,000,  Notes  Rec.  per  list,  $1,800,  Accts.  Rec.  per  list,  $2,400, 
and  cash  for  the  remainder. 

30.  Our  account  against  George  Armstrong  for  $7.64  has  been  found  to 
be  absolutely  worthless.    Charge  the  balance  to  Loss  and  Gain. 

31.  Peter  Cooley,  who  is  endeavoring  to  avoid  payment  of  his  debts,  has 
agreed  to  settle  our  balance  of  $58.16  against  him  by  paying  cash  $3  and 
giving  his  note  endorsed  by  Edward  Flynn  and  Elmer  Million  for  $37,  pro- 
vided that  he  receive  credit  in  full  of  account.  Considering  this  proposition 
the  most  favorable  to  be  had,  the  settlement  was  thus  made.    Make  entry. 

DIRECTIONS.    After  making  heading,  submit  your  work. 


96 


PROGRESSIVE   BUSINESS   ACCOUNTING 


EXERCISE  XVIII 

INFORMATION  #  144.  Books  having  more  tlian  tlie  ordinary  two-col- 
umn ruling  are  called  special  column  books.  Special  columns  are  used  in 
journal,  cash  book,  sales  books,  ledgers  and  other  books.  One  purpose  of  the 
bookkeeper  in  using  special  columns  is  to  place  certain  entries  of  the  same 
kind  in  one  column  which  can  be  footed  and  the  total  posted  instead  of  post- 
ing by  items.  The  labor  of  posting,  which  occupies  much  time,  can  be  very 
much  reduced.  For  example,  if  on  the  credit  side  of  a  cash  book  there 
appear  fifteen  entries  debiting  Expense,  a  special  "Expense"  column  can  be 
added  to  the  other  columns  into  which  all  Expense  debits  can  be  carried.  At 
posting  time  this  column  is  footed,  and  the  total  posted  to  the  debit  of  Expense. 
Thus  one  posting  takes  the  place  of  fifteen  postings  with  the  result  that  labor 
and  ledger  space  are  reduced.  The  other  principal  reason  for  the  use  of 
special  columns  is  that  where  special  ledgers  are  used,  the  items  posted 
to  the  special  ledgers  can  be  footed,  and  the  total  posted  to  the  controlling 
account.  (See  Infor.  #147  and  148.  This  important  feature  of  bookkeeping 
is  illustrated  in  Ex.  XIX.) 

#145.  Where  special  columns  are  used,  double  sets  of  headlines  are  ruled 
which  are  divided  by  the  vertical  columns  into  divisions  to  contain  the  head- 
ings of  the  columns.  A  knowledge  of  when  and  how  to  use  special  columns 
is  always  of  advantage  to  a  bookkeeper.  Since  only  the  standard  rulings  can 
be  purchased  of  general  stationers,  special  books  have  to  be  made  to  order 
from  copy  furnished  by  the  accountant. 

EXPLANATION.  In  this  exercise,  the  student  will  prepare  a  special 
column  journal  and  write  the  headings.  He  will  also  rearrange  a  standard 
ruling  into  special  ruling.  The  uses  of  the  special  columns  will  be  explained 
in  the  following  exercise. 

DIRECTIONS.  Take  a  sheet  of  writing  paper  and  rule  a  three  line  head- 
ing across  the  top.  One  writing  space  below,  rule  a  two-line  heading.  Rule 
vertical  columns  as  spaced  in  the  model.  These  vertical  rulings  will  divide 
the  headings  into  parts.  Be  careful  not  to  run  the  vertical  lines  that  separate 
given  columns  through  the  lower  headline. 


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PROGRESSIVE  BUSINESS   ACCOUNTING  97 

On  the  reverse  side  of  the  special  column  journal  make  a  three  column 
credit  side  of  a  cash  book  as  shown  in  model. 

NOTE. — The  expressions  "three-column  cash  book,"  "four-column  jour- 
nal," etc.,  refer  to  the  number  of  money  columns  used. 

Having  completed  the  above,  head  the  work  journal  at  top,  and  submit 
for  examination. 

QUESTIONS.     1.     What  are  special  columns? 

2.  Name  several  books  that  may  have  special  columns. 

3.  What  two  principal  reasons  for  the  use  of  special  columns  in  books 
of  original  entry? 

4.  Describe  the  headlines  used  in  special  column  books. 

5.  Why  should  a  bookkeeper  be  able  to  rule  special  column  books  prop- 
erly!! 

EXERCISE  XIX 

INFORMATION  #  146.  Certain  accounts  of  the  same  kind  called  group 
accounts  are  conveniently  placed  under  one  title  called  the  group  title.  The 
purpose  of  the  group  title  is  to  show  under  one  heading  the  combined  relation 
to  the  business  of  certain  similar  accounts.  The  following  are  group  accounts : 
Notes  Receivable,  which  shows  the  total  of  notes  owing  to  the  business 
although  each  separate  note  may  be  a  claim  against  a  separate  signer. 

Notes  Payable,  which  may  include  the  firm's  note  indebtedness  to  several 
holders. 

Accounts  Receivable,  a  group  title  in  the  general  ledger,  used  to  represent 
the  aggregate  of  all  the  accounts  against  others. 

Accounts  Payable,  representing  the  aggregate  of  all  the  accounts  owing 
others.  , 

Shipments  to  (firm  name),  used  as  a  general  heading  for  all  of  the  ship- 
ments made  to  a  specified  firm. 

Consignments  from  (firm  name),  used  to  represent  all  of  the  separate 
consignments  received  from  a  certain  firm. 

C.  0.  D.'s  used  to  represent  all  of  the  sales  made  subject  to  payment  on 
delivery  of  the  merchandise  sold. 

Suspense,  used  as  a  general  title  to  represent  all  debits  or  credits  that 
cannot  be  entered  under  their  right  titles  until  further  information  is  gained; 
as,  a  receipt  of  cash  through  the  mail  without  any  writing  to  show  the  re- 
mitter's name. 

Doubtful  Accounts,  a  title  for  accounts  owing  the  firm  that  have  ceased 
to  be  perfectly  good,  and  are  transferred  from  the  accounts  receivable  for 
special  attention. 

Stock  Account,  representing  the  holdings  of  the  different  investors  in  a 
joint  stock  company  or  corporation. 

#  147.  Group  accounts  are  treated  in  two  ways.  In  a  smaller  set  of 
books,  the  group  title  is  placed  at  the  top,  and  each  special  title  of  the  group 
is  given  one  or  more  lines  space  below  it.  If  only  one  line  is  used,  the  special 
title  is  placed  in  the  explanatory  space.  When  thus  placed  they  are  fre- 
quently numbered.  (See  Shipment  and  consignment  accounts,  page  73 ;  C.  O.  D. 
account,  page  99,  etc.) 


98  PROGRESSIVE  BUSINESS   ACCOUNTING 

In  a  large  set  of  books  each  group  may  be  given  a  special  ledger,  or 
register  that  takes  the  place  of  a  ledger.  The  aggregate  of  the  accounts  in  any 
of  these  special  ledgers  is  posted  to  the  general  ledger  under  the  group  title. 
A  group  account  in  the  general  ledger  which  represents  the  aggregate  of 
accounts  kept  in  a  special  ledger  is  called  a  controlling  account,  because  the 
total  of  balances  in  the  special  book  must  equal  the  balance  of  the  group 
account  that  controls  it. 

In  many  well  kept  sets  of  books,  part  of  the  group  accounts  are  itemized 
in  the  general  ledger  and  part  of  them  are  kept  in  special  ledgers.  Some  of 
the  books  that  are  kept  in  separate  covers,  whose  aggregate  is  represented  by 
a  controlling  account  in  the  general  ledger  are  the  note  ledger  or  notes 
receivable  and  payable  books,  the  sales  ledger,  the  purchase  ledger,  the 
shipment  ledger,  the  consignment  ledger,  the  C.  0.  D.  ledger,  the  ledger  of 
doubtful  accounts,  the  stock  ledger,  the  depositor's  or  individual  ledger 
(in  a  bank),  etc. 

#  148.  Two-column  books  of  original  entry  are  used  with  one  ledger 
as  in  Sets  A.  and  B.  When  a  general  and  one  or  more  special  ledgers  are 
used,  special  columns  must  be  added  to  the  two  columns  in  one  or  more  of 
the  ordinary  books  of  original  entry.  A  special  column  contains  the  items 
to  be  posted  to  a  special  ledger.  The  column  is  footed,  and  the  total  posted 
to  the  controlling  account  in  the  general  ledger.  Thus  the  balance  of  the 
controlling  account  equals  the  list  of  balances  of  the  accounts  in  the  special 
ledger  that  it  controls.  This  proof  of  accuracy  in  posting  is  one  of  the  most 
important  safeguards  in  bookkeeping. 

:#:  149.  AVhen  a  general  ledger  and  special  ledgers  are  kept,  the  trial 
balance  is  taken  from  the  accounts  in  the  general  ledger.  These  accounts 
should  balance  without  reference  to  the  special  ledgers.  The  lists  of  accounts 
in  the  special  ledgers  are  compared  with  the  controlling  accounts  in  the 
general  ledger,  to  verify  the  posting  of  the  special  ledgers. 

INFORMATION  #150.  When  merchandise  is  sold  on  condition  that 
cash  is  to  be  paid  when  the  delivery  is  made,  the  same  is  said  to  be  a  C.  0.  D. 
delivery. 

When  the  delivery  is  made  in  the  town  where  sold,  a  memo  of  the  sale 
is  entered,  not  posted;  and  after  the  goods  are  delivered  and  cash  collected, 
the  entry  is  made  as  a  cash  sale. 

Express  companies  carry  packages  to  all  parts  of  the  country,  and  if 
instructed  by  the  shipper,  will  withhold  delivery  until  the  purchaser  pays 
for  the  merchandise.  The  express  company  on  payment  returns  the  cash  to 
the  shipper. 

Railroad  companies  do  not  undertake  to  collect  for  the  shipper  in  this 
way.  The  same  result  is  secured,  by  the  shipper  securing  from  the  railroad 
a  bill  of  lading  which  must  be  presented  at  the  point  of  destination  by  the 
person  who  w^ould  receive  the  goods.  The  shipper  then  draws  a  draft  on  his 
customer,  attaches  the  bill  of  lading  to  the  draft  and  sends  all  for  collection 
through  a  bank.  If  the  customer  pays  the  draft,  he  receives  the  bill  of  lading 
with  it.  The  bill  of  lading  presented  at  the  freight  office  entitles  him  to  the 
shipment. 

#  151.  C.  0.  D.'s  by  express  or  freight  are  subject  to  delays  often  run- 
ning over  weeks  or  even  months.  So  it  is  necessary  to  keep  a  C.  0.  D. 
account  with  them  in  the  sales  ledger,  so  that  the  bookkeeper  can  urge  pay- 


PROGRESSIVE  BUSINESS   ACCOUNTING 


99 


ment  in  case  of  delay,  or  can  arrange  for  a  return  of  the  merchandise  if  the 
customer  fails  to  make  payment. 

On  the  debit  side  of  the  C.  O.  D.  account  is  placed  the  date,  name  of  cus- 
tomer, folio  of  salesbook  and  amount.  When  returns  are  received,  the  C.  0.  D. 
account  is  credited  on  the  same  line,  opposite  the  debit  entry.  See  model. 


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EXPLANATION.  In  this  exercise,  three  ledgers  will  be  kept — a  gen- 
eral ledger,  a  purchase  ledger,  and  a  sales  ledger.  Special  columns  will  be 
added  to  the  books  of  original  entry  as  needed  to  accommodate  these  ledgers. 
At  the  close  of  the  month  a  trial  balance  will  be  taken.  Lists  of  the  two 
special  ledgers  will  be  taken  and  compared  with  the  two  controlling  accounts. 

DIRECTIONS.  Take  three  half  sheets  of  ledger,  and  page  each  1  and  2. 
Head  them  General  Ledger,  Purchase  Ledger,  and  Sales  Ledger  respectively. 
Enter  in  the  general  ledger  the  following  accounts,  allowing  each  one-fifth 
page :  On  page  1,  Ezra  Helmer,  Propr.,  Merchandise,  Expense,  Furniture  & 
Fixtures,  and  Loss  &  Gain;  on  page  2,  Notes  Receivable,  Notes  Payable, 
Accounts  Receivable,  and  Accounts  Payable. 

When  accounts  are  opened  in  the  purchase  and  sales  ledgers,  allow 
each  account  one-fifth  page. 

Take  a  sheet  of  journal  and  page  it  1  to  4.  Use  page  1  for  purchase 
book,  pages  2  and  3  for  cash  book,  page  4  for  sales  book.  In  the  cash  book, 
rule  second  headlines  one  space  below  the  headlines  found  there,  and  write 
in  the  debit  side  at  head  of  the  columns,  "Date,  Fol.,  Cr.  Titles,  Explanation, 
Accts.  Rec.  Cr.,  General  Cr."  On  the  credit  side  rule  one  extra  column  as  in 
Ex.  XVIIL,  and  at  the  top  write  "Date,  Fol.,  Dr.  Titles,  Explanation, 
Accts.  Pay.  Dr.,  Expense  Dr.,  General  Dr." 

Rule  and  head  a  sheet  of  writing  paper  in  four-column  journal,  as 
directed  in  Ex.  XVIIL  This  will  be  the  journal.  Take  one-half  sheet  of 
journal  paper,  page  1  for  trial  balances  and  page  2  statements. 

TO  THE  STUDENT:  More  than  one  student  who  has  completed  a 
bookkeeping  course,  upon  taking  some  minor  position  in  a  large  office,  has 
been  discouraged  in  finding  there  books  with  ruled  columns  such  as  he  never 
saw  before.  Such  persons  should  remember  that  no  accountant  ever  saw  all 
of  the  rulings  that  are  used  in  business  houses.  The  different  varieties  of 
ruling  books  to  accommodate  different  conditions  run  into  the  thousands. 
But  it  is  possible  for  him  to  master  any  of  these  forms  without  hesitation 
if  he  will  learn  the  few  simple  principles  that  govern  all  special  ruling. 
The  mastery  of  this  exercise  will  do  much  toward  making  the  subject  of 
special  columns  clear.     Do  not  hurry  through  it. 


100 


PROGRESSIVE   BUSINESS   ACCOUNTING 


TRANSACTIONS.  Oct.  1,  1909,  Ezra  Helmer  opens  a  retail  furniture 
and  household  supply  store.  He  invests  Cash  $3,364.04,  Merchandise  per 
inventory  $7,832.96,  Accounts  Receivable  per  list  $2,214.56,  and  Accounts 
Payable  per  list  $6,683.48. 

Make  opening  entry  in  the  journal,  using  the  general  debit  and  credit 
columns  as  in  a  two-column  journal.  Post  the  entries  to  the  cash  book 
(general  column)  and  to  the  ledger. 

The  list  of  Accounts  Receivable  and  Accounts  Payable  follows.  They 
are  balances  due  from  customers  on  previous  sale  accounts,  or  due  to  firms 
on  previous  purchase  accounts. 


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PROGRESSIVE  BUSINESS  ACCOUNTING  101 

List  of  Accounts  Receivable  List  of  Accounts  Payable 

James  Adams  $    597.40  Duhamel  &  Co $    529.49 

Oscar  Benson  27.83  Earlham  Mfg.  Co 1,598.79 

W.  W.  Davidson 140.80  The  Hornellsville  Co 15.71 

Chas.  Emery 95.88  Inman  &  Long 249.59 

Isaac  Garmore   492.62  Long  &  Hopper 3,589.64 

C.  T.  Maine 521.88  Mass.  Furn.  Co 700.26 

Owens  &  Co 44.16  

Rollins  &  Son 293.99  Total $6,683.48 


Total $2,214.56 

Compare  the  total  of  the  list  of  accounts  receivable  with  the  amount 
charged  to  that  account  in  the  general  ledger.  If  correct,  open  accounts 
with  each  in  the  sales  ledger  and  enter  the  balances  to  the  debit  of  these 
accounts.  Do  not  proceed  until  it  is  clear  to  you  that  the  sum  of  the  balances 
in  the  sales  ledger  equals  the  amount  to  the  debit  of  Accounts  Receivable 
in  the  general  ledger. 

Likewise,  compare  the  total  of  the  list  of  accounts  payable  with  the 
balance  of  Accounts  Payable  account  in  the  general  ledger.  If  correct,  open 
accounts  with  each  in  the  purchase  ledger.  Before  proceeding,  observe 
that  the  sum  of  the  balances  in  the  purchase  ledger  equals  the  amount  to 
the  credit  of  Accounts  Payable  in  the  general  ledger. 

Take  a  trial  balance  of  the  general  ledger  and  cash  book  and  enter  it 
at  top  of  trial  balance  sheet. 

Oct.  2.     Paid  for  rent  of  store  room  to  Nov.  1,  $80. 

Enter  as  shown  in  the  model,  carrying  the  amount  to  the  Expense  Dr.  column. 
It  is  not  necessary  to  make  any  entry  in  the  title  column  of  the  cash  book,  because 
no  Items  will  be  posted  from  this  column.  The  column  will  be  footed  and  the  total 
posted  to  the  debit  of  Expense  later.  Check  mark  the  folio  column  to  show  that 
this  item  is  not  to  be  posted. 

Paid  James  Wiley  for  blank  books  for  office  use,  $32.90  (Expense), 

Paid  Allen  Printing  Co.  for  stationery,  $8.50. 

Paid  C.  E.  Jones,  agent  Columbian  Fire  Insurance  Co.,  for  insurance 
on  stock  of  goods  as  on  policy  received,  $28.80. 

Paid  Nauman  &  Co.'s  bill  for  furniture,  $88.70. 

As  the  Furniture  &  Fixtures  account  has  no  special  column,  it  will  be 
necessary  to  enter  the  title  in  the  title  column  and  carry  the  amount  to  the 
general  column.     After  you  have  done  so,  post  to  the  general  ledger. 

Paid  W.  B.  Doble's  bill  for  general  drayage,  $3.15    (Expense). 

Paid  Jones  Scales  Co.  bill  for  furniture,  $40.29.     (Post). 

Paid  Henry  Minturn  on  wages  account,  $5   (Expense). 

Oct.  3.     Paid  Long  &  Hopper  cash  on  account,  $500. 

This  is  one  of  the  accounts  payable  found  in  the  purchase  ledger.  Carry 
the  amount  to  the  Accounts  Payable  column.  Post  to  the  purchase  ledger  all 
items  in  the  accounts  payable  column. 

Paid  Earlham  Mfg.  Co.  cash  in  full  of  account. 

Oct.  4.     Paid  Duhamel  &  Co.  cash  on  account,  $150, 

Paid  C.  P.  Colgrove,  agent,  for  additional  insurance  in  Boston  Fire  & 
Marine  Ins.  Co.,  $14.40. 

Oct.  5.     Paid  Nauman  &  Co.  $18.60  for  an  office  chair,  per  bill. 


102 


PROGRESSIVE  BUSINESS  ACCOUNTING 


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Paid  Mass.  Furn.  Co.  cash  on  account,  $200. 

Received  cash  from  Charles  Emery  in  full  of  account. 

This  is  one  of  the  accounts  receivable  and  is  found  in  the  sales  ledger. 
The  amount  paid  should  therefore  be  entered  in  the  accounts  receivable  Cr. 
column  of  the  cash  book  and  then  posted  to  Emery's  credit. 

Received  cash  of  James  Adams,  to  apply  on  account,  $15. 

Received  cash  of  Isaac  Garmore  on  account,  $100. 

Received  of  Oscar  Benson  cash  on  account,  $10. 

Sold  W.  "W.  Davidson,  on  account,  1  china  closet,  quartered  weathered 
oak,  for  $21.90;  I/2  doz.  dining  chairs,  golden  oak,  for  $18;  1  dining-room 
table  for  $24.60;  2  ladies'  rockers,  $3.45  and  $3.75;  1  wall  set,  $20.90. 

Enter  in  the  sales  book  and  post  to  the  sales  ledger. 

Sold  Oscar  Benson,  on  account,  6  dining  chairs  @  $4 ;  1  settee  for  $12.80 ; 
1  Schram  patent  rocker  for  $21.25;  1  Princess  dresser  for  $13.75;  1  ladies' 
dressing  table  for  $15.65. 

Shipped  Harry  Belmont,  Hudson,  Iowa,  by  W.  F.  &  Co.  express,  C.  0.  D., 
one  office  chair  for  $5.65.     Post. 

Review  Infor.  #150  and  #151.  Open  C.  0.  D.  account  on  page  2  of 
sales  ledger. 

Shipped  Robert  Adams,  O'Neill,  Neb.,  by  U.  S.  and  Am.  Express,  C.  0.  D. : 
1  ladies'  rocker  for  $7.80;  1  library  book  case  for  $14.70:  1  music  cabinet 
$8.45. 

Shipped  Rollins  &  Son,  on  account,  by  C.  &  N.  W.  Ry. :  1  large  arm  rocker 
for  $6.90;  1  porch  settee  for  $6.25;  1  chiffonier  for  $22.20;  1  jardiniere  stand 
for  $1.60;  1  library  table  for  $41.90. 


PROGRESSIVE  BUSINESS   ACCOUNTING 


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Oct.  8.  Sent  Charles  Colfax,  via  Am.  X.  (American  Express),  C.  0.  D. : 
1  office  chair  for  $5.45;  1  sideboard,  quartered  golden  oak,  for  $49.50. 

Shipped  Fred  Thornton  &  Co.,  by  C,  B.  &  Q.  Ry.,  C.  0.  D.  (sight  draft 
with  bill  of  lading  attached)  :  1  Steele  Davenport  for  $5 ;  1  portable  wardrobe 
for  $14.10;  1  hall  tree  for  $15;  1  morris  chair,  weathered  oak,  for  $13.75. 

Sold  Charles  Emery,  on  account,  1  typewriter  chair  for  $7.50;  1  ladies' 
writing  desk  for  $15.95;  1  mahogany  pedestal  for  $8. 

Oct.  31.  Sold  Isaac  Garmore,  on  account,  1  bedroom  set  for  $48.50; 
1  leather  couch  for  $60. 

The  sales  given  represent  the  entire  sales  for  the  month.  You  may 
foot  the  sales  book,  dating  the  footing  as  Oct.  31.  All  entries  on  the  sales 
book  have  been  posted  to  the  debit  of  certain  accounts  receivable  in  the  sales 
ledger,  therefore  the  total  is  a  debit  to  Accounts  Receivable,  the  controlling 
account  in  the  general  ledger.  The  total  is  also  a  credit  to  Merchandise. 
Show  the  debit  and  credit  by  a  journal  entry  on  the  sales  book  as  shown 
in  the  model,  and  post  to  the  debit  of  Accounts  Receivable  and  the  credit  of 
Merchandise  into  the  general  ledger.  Notice  how  the  debit  and  credit  titles 
and  post  marks  are  placed  when  both  titles  appear  on  one  line. 

Oct.  7.  Bought  of  The  Hornellsville  Co.,  on  account,  Mdse.  per  Inv. 
#1,  $238.70. 

Enter  in  purchase  book  and  post  to  the  purchase  ledger. 

Oct.  15.  Bought  of  Duhamel  &  Co.,  on  account,  Mdse.  per  Inv.  :^2 
$58.26. 

Oct.  18.  Bought  of  Inman  &  Long,  on  account,  Mdse.  per  Inv.  #3. 
$764.91. 


104 


PROGRESSIVE  BUSINESS  ACCOUNTING 


Oct.  31.  Bought  of  Mass.  Furniture  Co.,  on  account,  Mdse.  per  Inv. 
#4,  $1,650.59. 

The  purchases  given  represent  the  entire  purchases  for  the  month.  Foot 
the  purchase  book  and  date  the  footing  Oct.  31.  All  entries  in  the  purchase 
book  have  been  posted  to  the  credit  of  certain  accounts  payable  in  the  pur- 
chase ledger,  therefore  the  total  is  a  credit  to  Accounts  Payable  the  con- 
trolling account  in  the  general  ledger.  The  total  is  also  a  Merchandise  debit. 
Make  a  journal  entry  on  the  purchase  book,  debiting  Mdse.,  and  crediting 
Accts.  Pay.,  using  the  form  given  in  the  sales  book,  and  post  the  two  to  the 
general  ledger. 

Oct.  5.     Received  C.  T.  Maine's  30-day  note  for  $300  to  apply  on  account. 

Enter  in  the  journal,  debiting  Notes  Receivable  in  the  general  column, 
and  crediting  C.  T.  Maine  in  the  Accounts  Receivable  column.     Post. 

Oct.  7.  "We  receive  from  W.  W.  Davidson  a  dining-room  table  which 
was  sold  to  him  subject  to  approval,  and  which  he  returns.  Pass  to  his 
credit  the  price,  $24.60. 

We  allow  credit  for  one  library  chair  $4,  short  in  a  sale  to  Oscar  Benson. 

Oct.  9.  We  send  to  The  Hornellsville  Co.  our  60-day  note  for  $254.41 
in  full  of  account.     (Debit  The  H.  Co.  in  Accts.  Pay.  column  of  journal.) 

Oct.  15.  Returned  to  Long  &  Hopper,  merchandise  not  of  grade  ordered, 
per  bill  rendered,  $736.59.     (Journal.) 

The  above  are  the  entire  journal  entries  of  the  month.  Foot  the  two 
special  columns  in  pencil.  The  Accounts  Payable  column  shows  that  items 
amounting  to  $991  have  been  posted  to  the  debit  of  ditferent  accounts  in 
the  purchase  ledger,  therefore  the  total  is  a  debit  to  Accounts  Payable,  the 
controlling  account  in  the  general  ledger.  Carry  the  total  into  general  debit 
column,  as  shown  in  model,  and  post. 

Accounts  Receivable  shows  that  items  amounting  to  $328.60  have  been 
posted  to  the  credit  of  different  accounts  in  the  sales  ledger,  therefore  the 
total  is  a  credit  to  Accounts  Receivable,  the  controlling  account  in  the 
general  ledger.  Carry  the  total  into  the  general  credit  column,  as  shown  in 
the  model,  and  post. 


PROGRESSIVE  BUSINESS  ACCOUNTING  105 

As  a  proof  of  correctness  of  entry,  foot  the  general  debit  and  credit 
columns  of  journal  as  shown  in  the  model. 

CASH  BOOK.  Oct.  10.  Received  cash  from  C.  T.  Maine  in  part  pay- 
ment of  his  note,  $100.  (Enter  in  cash  book,  general  column,  because  Notes 
Receivable  account  is  found  in  the  general  ledger.     Post.) 

Oct.  15.  Paid  The  Hornellsville  Co.  $100  to  apply  on  note  due  them. 
(Enter  in  general  column.     Why?) 

The  U.  S.  Express  returns  cash  $30.95  collected  from  Robert  Adams  in 
payment  of  C.  O.  D.  on  him  Oct.  5.  (Enter  in  Accounts  Receivable  column 
of  cash  book,  as  in  model,  and  post  to  credit  of  C.  0.  D.  account  on  the  same 
line  opposite  the  charge.     Use  X  marks.) 

Oct.  23.  The  bank  credits  $47.85  our  draft  on  Fred  Thornton  for  ship- 
ment C.  0.  D.  Oct.  10. 

Oct.  31.     Received  cash  of  Rollins  &  Son,  on  account,  $200. 

The  above  are  the  entire  cash  book  entries  of  the  month.  Pencil  foot 
the  three  special  columns  of  the  cash  book.  On  the  debit  side  you  will  note 
that  $499.68  has  been  posted  to  the  credit  of  different  accounts  in  the  sales 
ledger,  therefore  the  total  is  a  credit  to  Accounts  Receivable  in  the  general 
ledger.  Carry  to  the  general  column  and  post.  See  model.  Likewise,  the 
total  of  the  Accounts  Payable  column  of  the  credit  side  should  be  carried 
to  the  general  column  and  posted  to  the  controlling  account. 

The  Expense  column  does  not  represent  any  special  ledger.  Carry  the 
total  to  the  general  column,  as  in  model,  and  post. 

There  remain  the  general  debit  and  credit  columns  of  the  cash  book. 
The  credit  footing  taken  from  the  debit  footing  shows  the  balance  on  hand. 
Enter  the  balance  and  rule  cash;  carry  balance  down. 

THE  GENERAL  LEDGER.  As  all  accounts  are  now  posted,  take  a 
trial  balance  of  the  general  ledger,  including  cash  balance. 

SPECIAL  LEDGERS.  Take  a  list  of  the  ledger  balances  of  the  sales 
ledger,  compare  the  total  of  this  list  with  the  balance  of  Accounts  Receivable 
in  the  trial  balance.  They  should  agree.  If  they  do  not,  locate  the  discrep- 
ancy. Take  a  list  of  the  ledger  balances  of  the  purchase  ledger,  and  compare 
the  total  of  this  list  with  Accounts  Payable  in  the  general  ledger. 

Copy  these  lists  below  the  trial  balance  of  Oct.  31. 

STATEMENT.  Make  a  statement  of  the  business.  (Taken  from  general 
ledger  and  inventories.  The  inventories  are  Merchandise  $9,584.30;  Expense, 
$50;  Furniture  &  Fixtures,  $125.)  Enter  this  statement  on  your  statement 
sheet. 

Close  the  ledger  in  accordance  with  the  statement.  Open  Loss  &  Gain 
account  at  foot  of  page  1. 

After  closing  the  ledger,  take  a  trial  balance  and  record  it  below  the 
statement  already  taken. 

DIRECTIONS.  After  the  above  work  is  completed,  arrange  the  rulings 
in  the  following  order  from  the  top  downward :  Journal,  Purchase,  Cash, 
Sales,  General  Ledger,  Purchase  Ledger,  Sales  Ledger,  Trial  Balances  and 
Statement ;  head,  pin  together  and  submit  for  examination. 

QUESTIONS.     1.     What  are  group  accounts? 
2.     Name  ten  group  titles. 


106  PROGRESSIVE  BUSINESS   ACCOUNTING 

3.  In  what  two  ways  are  group  titles  treated? 

4.  What  can  you  say  of  the  ledger  as  used  with  two-column  books  of 
original  entry? 

5.  "When  a  general  and  special  ledgers  are  used,  what  changes  are  made 
in  books  of  original  entry? 

6.  What  items  does  a  special  column  contain? 

7.  What  can  you  say  of  the  controlling  account? 

8.  What  three  ways  of  collecting  on  delivery  are  mentioned? 

9.  Describe  the  C.  0.  D.  account. 

10.  When  special  ledgers  are  kept,  from  what  book  or  books  is  the  trial 
balance  taken? 

11.  How  is  the  posting  of  the  special  ledger  proven? 

12.  How  many  ledgers  were  kept  in  Ex.  XIX.? 

13.  Describe  the  journal  used. 

14.  Describe  the  cash  book  used. 

15.  How  are  special  columns  carried  to  general  columns  at  posting  time? 

EXERCISE  XX 

INFORMATION  #  152.  Many  business  concerns  are  organized  in  the 
form  of  private  corporations.  A  corporation  is  an  organization  of  a  number 
of  persons  empowered  by  state  authority  to  transact  business  as  one  person. 
It  is  called  a  private  corporation  when  it  is  organized  for  the  purpose  of 
conducting  business  enterprises  for  gain  to  its  members.  The  investment 
(capital  stock)  is  divided  into  shares  of  equal  value.  These  shares  may  be 
bought  and  sold.  A  person  becomes  a  part  owner  of  the  business  (stock 
holder)  by  buying  one  or  more  of  these  shares.  The  number  of  shares  held 
by  a  person  is  the  measure  of  one's  interest  in  the  company.  A  person  may 
become  a  stockholder  and  afterward  dispose  of  his  stock  without  legally 
affecting  the  corporation.  Very  often  one  person  is  a  stockholder  in  many 
different  corporations. 

#  153.  The  interest  of  the  stockholders  in  the  business  is  shown  in  the 
stock  ledger.  This  is  a  special  ledger,  in  which  each  stockholder  has  an 
account  showing  to  his  credit  the  number  of  shares  held  by  him  and  their 
par  value.  A  list  of  all  of  the  balances  in  the  stock  ledger  should  equal  the 
balance  of  Capital  Stock,  the  controlling  account  in  the  general  ledger,  if 
all  shares  are  issued.  If  some  shares  are  not  issued,  this  list  should  equal 
the  Capital  Stock  credit  diminished  by  the  shares  still  held  by  the  company. 

:j^  154.  The  general  books  of  a  corporation  are  arranged  with  reference 
to  the  business  to  be  transacted  as  they  would  be  in  a  sole  proprietorship 
or  a  partnership.  However,  some  accounts  in  the  general  ledger  are  usual 
to  corporation  bookkeeping.     Among  them  are : 

Capital  Stock,  which  represents  the  entire  authorized  investment  in  the 
business,  and  takes  the  place  of  proprietor's  or  partners'  accounts. 

Unsubscribed  Stock,  which  represents  any  part  of  the  capital  stock 
before  it  is  taken  by  stockholders. 

Treasury  Stock,  which  represents  stock  of  the  company  which  has  been 
acquired  from  stockholders,  and  is  held  for  sale. 

Subscription,  which  represents  the  aggregate  amount  which  stockholders 
have  contracted  to  pay  for  their  stock,  but  which  has  not  been  collected  by 
the  officers  of  the  company.    It  is  the  controlling  account  of  the  installment 


PROGRESSIVE  BUSINESS  ACCOUNTING 


107 


ledger,  which  contains  in  detail  the  accounts  with  the  subscribers. 

Dividends,  an  account  to  which  that  part  of  the  net  gain  is  carried  that 
is  to  be  paid  to  stockholders  as  their  dividend  or  divided  profit. 

Dividends  is  a  group  account,  as  under  it  may  be  credited  dividend 
No.  1,  No.  2,  etc.    When  the  stockholders  are  paid,  the  account  is  debited. 

Surplus,  an  account  to  which  is  posted  that  part  of  the  net  gain  that  is 
to  be  kept  in  the  business  as  additional  capital. 

Undivided  Profits.  To  this  account  is  posted  the  net  gain  as  a  credit. 
It  is  charged  with  the  part  posted  to  Dividends,  Surplus,  or  other  accounts. 
The  remaining  balance,  if  any,  is  open  to  any  other  disposition  at  any  time. 

#  155.  Although  the  stock  ledger  and  installment  ledger  are  special 
ledgers,  there  are  commonly  no  special  columns  in  the  journal  and  cash  book 
for  items  posted  to  them,  because  as  a  rule  the  stock  records  are  compara- 
tively few  and  are  mostly  completed  within  a  few  pages  at  the  beginning  of 
the  business.  Where  entries  for  the  stock  or  installment  ledgers  are  made 
in  the  general  books,  they  are  short  extended,  that  is,  written  in  the  explan- 
atory space  for  posting  to  the  special  ledger,  while  the  corresponding  amount 
to  be  carried  to  the  general  ledger  is  extended  to  the  money  column. 

#  156.  When  a  person  becomes  a  stock  subscriber,  the  voucher  for  his 
subscription  is  the  subscription  list  which  he  has  signed ;  when  he  pays  a  part 
of  his  subscription,  an  installment  receipt  is  issued  and  the  book  record  is 
made  from  the  stub  of  the  installment  receipt  book;  when  the  stock  is  paid 
for  in  full,  a  stock  certificate  is  issued  and  the  record  is  made  from  the  stub 
of  the  stock  certificate  book.    These  forms  will  be  taken  up  in  Set  C. 

#  157.  The  business  of  a  corporation  is  carried  on  by  officers  who  are 
elected  by  the  stockholders  to  represent  them.  Commonly  there  are  elected 
a  president,  a  secretary,  and  a  treasurer.  These  or  any  other  officers  that 
may  be  elected  are  responsible  to  the  stockholders  for  their  official  acts. 


108  PROGRESSIVE  BUSINESS   ACCOUNTING 

EXPLANATION.  In  this  exercise,  entries  requiring  the  use  of  the  stock 
and  installment  ledgers  will  be  made  and  the  lists  of  these  two  special 
ledgers  will  be  checked  with  their  controlling  accounts.  The  purpose  is  to 
show  their  use  and  relation.  Later,  closing  entries  will  be  made  in  Loss  & 
Gain,  Undivided  Profits,  Dividends,  and  Surplus  accounts. 

DIRECTIONS.  Take  two  half  sheets  of  ledger.  Use  one  for  general 
ledger,  entering  on  page  1  the  four  accounts,  Capital  Stock,  Unsubscribed 
Stock,  Treasury  Stock,  Subscription.  Enter  on  page  2,  Dividends,  Surplus, 
Undivided  Profits,  Loss  &  Gain.  Head  page  1  of  the  other  sheet  Stock 
Ledger,  and  page  2  Installment  Ledger. 

Use  a  folded  sheet  of  journal  paper;  page  1  for  journal,  pages  2  and  3 
for  cash  book,  page  4  for  special  ledger  lists. 

TRANSACTIONS.  Mar.  1.  The  incorporators  of  the  Wheaton  Milling 
Co.,  having  complied  with  the  legal  requirements  pertaining  to  the  formation 
of  corporations^  are  authorized  to  solicit  subscriptions  and  transact  other 
business  as  a  corporation  with  a  capital  stock  of  $100,000. 

A  stock  subscription  list  has  been  opened.  It  contains  the  names  of  the 
following  persons,  who  agree  to  pay  for  the  number  of  shares  set  opposite 
their  names.  The  payments  are  to  be  made  as  called  by  the  board  of 
directors. 

Stanton  Cutler 300  shares,  each  $100  par  value,  $30,000 

Harvev  Wester   200      "         "         "      ''       "         20,000 

M.  E.  Reddin  100       "         "         "      "       "         10,000 

Marcella  Kline    100       "         "         "      "       "         10,000 

Wm.   Reupke    50      "         "         "      "       "  5,000 

C.  E.   Quintrell 50      "         "         "      "       "  5,000 

The  subscriptions  amount  to  $80,000  of  the  $100,000  authorized  capital 
stock. 

Make  a  journal  entry  debiting  Subscription  $80,000.  (Subscription 
represents  claims  against  persons  for  stock.)  Debit  Unsubscribed  Stock 
$20,000.  (This  is  the  account  receiving  the  remainder  of  the  capital  stock.) 
Credit  Capital  Stock  $100,000.  (This  is  the  giving  account  and  represents 
the  entire  liability  of  stockholders.)     See  model  entry  in  journal. 

Post  the  three  general  titles  to  the  general  ledger.  Debit  each  subscriber 
in  the  installment  ledger,  allowing  five  lines  to  each  account.  Indicate  the 
posting  by  a  check  mark  as  in  model.  Observe  that  the  payment  for  the 
stock  assumed  by  the  subscribers  is  to  be  collected  from  this  ledger.  If  their 
stock  were  paid  in  full  at  once,  this  ledger  would  not  be  needed. 

In  the  Stock  ledger,  each  stockholder  has  an  account,  in  which  he  is 
credited  with  the  number  and  par  value  of  the  shares  held.  Posting  is  done 
to  the  stock  ledger  from  the  subscription  list  and  afterward  from  the  stubs 
of  the  stock  certificate  book. 

Open  an  account  with  each  subscriber  and  from  the  list  given  in  the 
text  book  carry  the  credit  to  the  respective  accounts,  allowing  four  lines  to 
each. 

The  stock  certificates  are  not  issued  until  fully  paid.  The  certificate 
numbers  are  not  to  be  entered  in  the  ledger  until  certificates  are  issued. 
The  credit  thus  made  is  conditional  upon  payment  of  the  account  against  the 
subscriber  in  the  installment  ledger. 


PROGRESSIVE  BUSINESS   ACCOUNTING 


109 


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y;'Z'a>i/  / 


.,<^:l,:^^^^.,:t.z?^-,^/<::^^^  i^  (^ 


3  o  a  o  o 


/  a  £>  o  o  £> 


Mar.  2.  The  following  persons  have  been  added  to  the  subscription  list: 
"Walter  Sitts,  50  shares,  $5,000 ;  Velora  Gingrich,  40  shares,  $4,000. 

Enter  in  journal,  debiting  Subscription,  and  crediting  Unsubscribed 
Stock.     Open  two  accounts  in  the  installment  ledger,  and  post. 

Make  entries  in  stock  ledger. 

INFORMATION  #  158.  AVhen  subscriptions  are  paid  in  installments 
(part  payments),  all  subscribers  are  called  upon  to  pay  a  given  per  cent 
of  their  subscription  on  a  given  date.  Successive  assessments  are  made  as 
tlie  board  of  directors  determine,  until  the  entire  100%  is  paid  in.  When 
several  installments  are  called,  they  are  referred  to  by  number,  as  first 
installment,  second  installment,  etc. 

TRANSACTIONS.  Mar.  5.  An  assessment  of  50%  of  the  subscribed 
stock  is  ordered  to  be  paid  on  or  before  Mar.  10. 

Mar.  8.  Received  cash  for  the  first  installment  on  subscription  account 
from  Stanton  Cutler,  50%  of  300  shares,  $15,000 ;  Wm.  Reupke,  $2,500. 

Enter  the  entire  amount  in  the  cash  book  to  the  credit  of  Subscription. 
Short  extend  the  credits  to  the  installment  ledger  (see  model).    Post. 

Mar.  10.  Received  cash  in  full  of  first  installments  of  C.  E.  Quintrell, 
Marcella  Kline,  Velora  Gingrich,  and  M.  E.  Reddin.  (Enter  and  post  as 
before.) 

Mar.  11.  Received  cash  in  full  of  first  installment  of  the  remaining 
subscribers.     (Enter  and  post.) 

Mar.  15.  Received  cash  of  Herbert  Ross  in  full  for  five  shares  of  the 
unsubscribed  stock,  $500.  Issued  to  him  stock  certificate  No,  1,  which  certi- 
fies that  he  is  the  owner  of  said  shares. 

Enter  in  cash  book  to  the  credit  of  Unsubscribed  Stock  in  the  general 
ledger,  and  of  Herbert  Ross  in  the  stock  ledger.  Post  the  certificate  number 
in  the  explanatory  space  of  stock  ledger.  The  number  indicates  that  the 
stock  credit  has  been  fully  paid. 

Sold  R.  A.  Gardner  eight  shares  of  unsubscribed  stock,  receiving  cash 
at  par,  $800.    Stock  certificate  No.  2  has  been  issued. 


110 


PROGRESSIVE   BUSINESS  ACCOUNTING 


April  1.  A  second  installment  of  25%,  to  be  paid  on  or  before  April  10, 
has  been  assessed  against  the  subscribers. 

April  8.  M.  E.  Reddin,  C.  E.  Quintrell,  Walter  Sitts,  and  Velora 
Gingrich  have  paid  their  second  installment  in  cash.     Enter  and  post. 

April  15.  Stanton  Cutler,  Harvey  Wester  and  Marcella  Kline  have  paid 
their  second  installments  in  cash, 

April  30.  M.  E.  Reddin  and  Wm.  Reupke  have  paid  the  remainder  of 
their  subscription  in  full.  There  have  been  issued  to  M.  E.  Reddin  stock 
certificate  No.  3  for  100  shares,  fully  paid,  and  to  Wm.  Reupke  stock  cer- 
tificate No.  4  for  50  shares,  fully  paid  up. 

After  posting  these  credits,  rule  the  accounts  in  the  installment  ledger 
that  balance.    Transfer  the  certificate  numbers  to  the  stock  ledger. 

May  25.  William  Reupke  offers  his  stock  for  sale.  As  he  would  prob- 
ably sell  it  to  a  person  who  would  be  an  undesirable  stockholder,  the 
company  buys  back  the  stock,  paying  cash  for  it  at  par.  It  is  to  be  held  as 
Treasury  Stock  until  disposed  of  to  some  other  person.  Enter  in  cash  book, 
debiting  Treasury  Stock  in  the  general  ledger  and  Wm.  Reupke 's  account 
in  the  stock  ledger.     Rule  the  latter  account. 

The  student  will  see  that  a  list  of  the  credits  in  the  stock  ledger  should  equal 
not  the  Capital  Stock  credit  in  the  general  ledger,  but  it  should  equal  the  Capital 
Stock  credit  diminished  by  the  debit  balances  of  Unsubscribed  Stock  and  Treasury 
Stock.  In  other  words,  these  three  accounts  combined  give  the  controlling  balance 
of  the  stock  ledger.  The  question  may  be  asked,  why  not  credit  Capital  Stock  with 
only  the  amounts  actually  subscribed  or  paid  for  and  thus  make  its  balance  equal 
to  the  credits  of  the  stock  ledger?  The  objection  to  crediting  the  entire  amount  Is 
that  the  entire  Capital  Stock  is  a  legal  liability  which  cannot  be  off-set  by  any  shares 
in  the  hands  of  the  company.  For  this  reason  the  authorized  capital  should  appear 
in  full  as  a  liability  in  the  general  ledger. 

June  5.  Sold  ten  shares  of  the  treasury  stock  to  Herbert  Ross  for  cash, 
$1,000.  Issued  to  him  stock  certificate  No.  5  for  the  amount.  (Credit 
Treasury  Stock  and  Herbert  Ross  Stock  account.) 

June  15.  The  company  has  taken  M.  E.  Reddin 's  entire  stock  holding, 
paying  cash  at  par. 

INFORMATION  #  159.  The  transfer  of  stock  from  one  holder  to 
another  is  recorded  in  the  certificate  of  transfer  book  and  from  that  posted 
to  the  debit  of  the  seller's  stock  account  and  to  the  credit  of  the  buyer's 


PROGRESSIVE  BUSINESS   ACCOUNTING 


111 


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^^Ta 


stock  account.  Such  entries  have  no  effect  upon  any  account  in  the  general 
ledger,  and  for  that  reason  are  not  considered  here. 

June  30.  The  student  will  now  make  a  list  of  the  accounts  in  the  stock 
ledger  and  their  credits.  Record  it  on  the  fourth  page  of  the  journal  ruled 
paper.  Does  the  total  equal  the  Capital  Stock  account  diminishecl  by  the 
sum  of  the  balances  of  Unsubscribed  Stock  and  Treasury  Stock? 

The  student  will  now  record  on  the  same  page  a  list  of  balances  from 
the  installment  ledger.  Does  it  equal  the  balance  of  Subscription  account  in 
the  general  ledger? 

If  both  lists  prove,  this  portion  of  the  exercise  may  be  considered  com- 
plete. 

EXPLANATION.  The  student  will  now  take  up  a  representative 
closing  of  a  corporation  ledger.  Suppose  that  the  commercial  accounts  have 
been  active  and  that  the  results  given  below  have  been  taken  from  ledger 
accounts  that  have  been  closed  in  regular  form.  The  Loss  &  Gain  account 
is  to  be  completed  and  the  net  gain  disposed  of. 

TRANSACTIONS.  June  30.  The  commercial  accounts  show  gains  or 
losses  to  be  carried  to  Loss  &  Gain  account  as  follows:  Mdse.,  gain 
$15,871.40;  Expense,  loss  $2,581.60;  Machinery  &  Tools,  loss  $1,621.49;  Inter- 
•>st  &  Discount,  loss  $379.46;  Commission,  gain  $169.70. 

Carry  these  to  Loss  &  Gain  account. 

Close  the  Loss  &  Gain  account  into  Undivided  Profits. 

The  directors  have  decided  to  pay  a  cash  dividend  of  5%  and  to  carry 
$5,000  of  the  profits  to  surplus  account,  and  to  leave  the  remainder  stand 
in  Undivided  Profits  account  until  some  future  action  is  taken  in  regard  to  it. 

Post  5%  of  the  total  credits  shown  on  the  Stock  ledger  from  Undivided 
Profits  to  the  credit  of  Dividends  account,  using  the  explanation  Dividend 
No.  1. 

Post  $5,000  from  Undivided  Profits  to  the  credit  of  Surplus  account. 

Balance  Undivided  Profits,  rule  and  carry  the  balance  down  under  date 
July  1. 

Enter  in  cash  book  checks  made  out  in  favor  of  each  stockholder  in 
payment  of  his  dividend.  Charge  dividend  No.  1  and  itemize,  using  the  name 
of  the  person  in  whose  favor  the  check  is  drawn.  Post  these  checks  to  Divi- 
dends account. 


112  PROGRESSIVE  BUSINESS   ACCOUNTING 

Dividend  No.  1  should  now  be  in  balance ;  rule  it. 

DIRECTIONS.  Head  each  sheet  as  usual,  pin  them  in  this  order: 
Journal,  cash  book,  lists,  general  ledger,  stock  ledger,  installment  ledger, 
and  submit  for  inspection. 

QUESTIONS.     1.     What  is  a  corporation? 

2.  What  is  a  private  corporation? 

3.  What  is  the  capital  stock? 

4.  What  are  shares  of  stock? 

5.  How  does  a  person  become  a  stockholder? 

6.  May  stock  in  a  corporation  be  bought  and  sold? 

7.  What  is  the  stock  ledger?    How  used? 

8.  A  list  of  the  stock  ledger  accounts  should  equal  what  accounts  in 
the  general  ledger? 

9.  Are  the  business  or  operating  books  of  a  corporation  necessarily  dif- 
ferent from  those  of  any  other  similar  concern? 

10.  Name  seven  general  accounts  usual  to  corporations, 

11.  Give  the  use  of  the  following  accounts :    Capital  Stock,  Unsubscribed 
Stock,  Treasury  Stock,  Subscription,  Dividends,  Surplus,  Undivided  Profits. 

12.  Why  are  special  columns  not  used  in  the  journal  and  cash  book  for 
the  stock  and  installment  ledgers?   * 

13.  Explain  the  use  of  the  subscription  list,  the  installment  receipt  book, 
the  stock  certificate  book. 

14.  What  persons  transact  the  business  of  a  corporation? 

15.  How  are  the  officers  chosen? 

16.  What  is  the  purpose  of  this  exercise? 

17.  Describe  an  account  in  the  stock  ledger. 

18.  Describe  an  account  in  the  installment  ledger. 

19.  What  is  meant  by  a  stock  assessment? 

20.  How  is  the  transfer  of  stock  from  one  holder  to  another  posted? 

21.  Does  such  transfer  have  any  effect  on  the  general  books? 

22.  Into  what  account  is  Loss  &  Gain  closed? 

23.  Name  two  accounts  into  which  Undivided  Profits  may  be  carried. 

24.  How  is  dividends  account  closed? 

25.  Name  five  corporations  doing  business  in  your  community. 


PROGRESSIVE  BUSINESS   ACCOUNTING  113 

SET  C 

BUSINESS  PRACTICE 

EXPLANATION.  You  are  to  open  a  mercantile  business  which  will  be 
conducted  as  a  corporation.  It  will  be  your  work  to  take  charge  of  the 
secretary's  records  as  well  as  the  books  of  the  company.  You  Avill  be  the 
manager  of  the  company  and  carry  out  all  of  its  business  transactions.  The 
books  will  be  arranged  with  a  general  and  special  ledgers  and  with  special 
columns  in  the  books  of  original  entry  similar  to  those  in  Ex.  XIX.  The 
corporation  accounts  explained  in  Ex.  XX.  will  be  used  in  the  general  ledger 
in  addition  to  the  operating  accounts.  Thus  the  books  and  rulings  will  illus- 
trate the  opening,  operation,  and  closing  records  of  a  corporation. 

DIRECTIONS.  Page  your  ledger  1  to  14  as  in  previous  sets.  This 
book  will  really  consist  of  five  ledgers,  which  are  to  be  treated  as  though 
in  five  separate  covers.  In  the  upper  left  corner  of  pages  1  to  6  write 
"General  Ledger;"  pages  7  and  8,  write  "Stock  Ledger;"  pages  9  and  10, 
"Installment  Ledger;"  pages  11  and  12,  "Purchase  Ledger;"  pages  13  and 
14,  "Sales  Ledger." 

On  page  1  of  the  general  ledger  enter  the  titles.  Capital  Stock  6  lines, 
Unsubscribed  Stock  15  lines,  Treasury  Stock  the  remainder  of  page;  page 
2,  Subscription  one-half  page ;  Accounts  Receivable,  Accounts  Payable,  Notes 
Receivable,  Notes  Payable,  Merchandise,  Furniture  &  Fixtures,  Expense, 
each  one-fourth  page ;  and  other  general  accounts  one-fourth  page  each  as 
opened. 

Give  all  accounts  in  the  special  ledgers  one-fifth  page  each. 

Books  of  entry :  Use  one  cover  for  purchase  pages  1  to  7 ;  Notes  Receiv- 
able and  Payable,  pages  8  and  9 ;  Sales,  pages  10  to  16. 

Use  the  third  cover  for  journal,  cash  book,  trial  balances,  inventories, 
statements,  and  secretary's  minute  book. 

TRANSACTIONS.  CI.  Organize  The  (Student's  Name)  Mercantile 
Coinpany,  a  corporation.  Five  persons  will  be  the  incorporators.  The  author- 
ized Capital  Stock  of  the  corporation  will  be  $25,000,  to  be  paid  in  install- 
ments as  provided  later.  The  purpose  is  to  conduct  a  dry  goods  business. 
You  may  now  promote  the  company  in  the  following  manner : 
First  Step.  Write  a  subscription  agreement.  This  agreement  is  to  be 
signed  by  the  persons  who  will  take  stock  in  the  company.  It  is  a  contract 
by  which  those  signing  can  be  compelled  legally  to  pay  for  the  amount  of 
stock  subscribed  after  the  steps  of  organization  required  by  the  state  laws 
are  complied  with.    The  form  is  given  below: 

SUBSCRIPTION  AGREEMENT 

We.  the  undersigned,  having  associated  ourselves  together  for  the  purpose  of 
organizing  a  corporation  for  buying  and  selling  merchandise  and  otherwise  transacting 
a  general  merchandising  business  under  the  laws  of  the  state  of  Iowa,  do  declare  as 
follows: 

1.  The   corporate   name   of  this   association   shall  be  The Mercantile 

Company. 

2.  The  principal  place  of  business  of  The  Mercantile  Company  shall  be 


114  PROGRESSIVE  BUSINESS  ACCOUNTING 

3.  The  authorized  capital  stocli  of  the Mercantile  Company  shall  be 

Twenty-five   Thousand   Dollars    ($25,000),   which   shall   be   divided   into   shares   of  One 
Hundred  Dollars    ($100)    each. 

4.  The  names  and  residences  of  the  shareholders  of  this  corporation,  with  the 
number  and  par  value  of  shares  to  be  held  by  each,  are  as  follows: 

Name  Residence  Number  of  Shares  Par  Value 

John  Manning Des  Moines,  Iowa One   Hundred   Shares $10,000 

E.  E.  Clermont Waterloo,  Iowa Fifty  Shares   5,000 

Burle  Van  Kleek Boston,  Mass Ten    Shares    1,000 

Walter  A.  Gerrabrant  . .  Ottumwa,  Iowa Twenty   Shares    2,000 

George  Sherrill Oelwein,  Iowa .Five  Shares   500 

When  the  above  subscription  agreement  is  i)roperly  filled,  enter  your 
name  as  subscriber  for  100  shares  and  secure  the  signatures  of  the  remaining 
incorporators:  E.  E.  Clermont,  50  shares;  Burle  Van  Kleek,  10  shares; 
"Walter  A.  Gerrabrant,  20  shares;  George  Sherrill,  5  shares. 

Second  Step.  Call  a  meeting  of  the  above  five  subscribers  for  the  pur- 
pose of  organization  and  adoption  of  Articles  of  Incorporation.  In  this 
meeting  the  business  to  be  transacted  is  assumed  to  be  completed  as  in  the 
minutes  given  below,  which  complete  and  copy  in  the  minute  book,  using 
the  current  date  and  the  appropriate  names. 

MINUTES  OF  THE  PROMOTERS  OF  THE  MERCANTILE  COMPANY 

-,  Oct.  2,  19- 


At  a  meeting  held  on  the  above  date  by  the  promoters  of  The Mercantile 

Company,  there  were  present ,  E.  E.  Clermont,  Burle  Van  Kleek,  Walter 

A.   Gerrabrant,  and  George   Sherrill. 

On  motion  of  Gerrabrant,  seconded  by  Sherrill,  E.  E.  Clermont  was  unanimously 
elected  Chairman,  and| was  elected  secretary. 

After  discussion  relative  to  the  proposed  articles  of  incorporation,  the  following 
motion   by  Van  Kleek,   seconded   by   Sherrill,   was  unanimouslv   carried: 

"Moved,  that  the  secretary  be  instructed  to  prepare  articles  of  incorporation  of 
The Mercantile  Company  in  conformity  with  the  expressions  of  this  meeting." 

Meeting  adjourned  to  meet  Oct.  4th,  19 — . 

,  Secretary. 

Third  Step,  Prepare  articles  of  incorporation,  making  any  changes  or 
additions  necessary,  in  the  following  form : 

ARTICLES   OF    INCORPORATION    FOR   THE MERCANTILE    CO. 

We,  the  undersigned,  do  by  these  presents  associate  ourselves  together  under 
and  by  virtue  of  chapter  one,  title  nine,  of  th<^  Code  of  Iowa,  and  the  laws  amendatory 
thereto  and  do  adopt  the  following  articles  of  incorporation: 

ARTICLE  I. 

The  name   of  this  corporation   shall  be  The Mercantile   Company,   \nd. 

its  principal  place  of  business  shall  be  ,  .     The  general  nature  of  its 

business  shall  be  the  purchase  and  sale  of  merchandise  and  such  other  business  as 
shall   be   contributory  thereto. 

ARTICLE  II. 

The  corporation  shall  commence  business  on  the  day  of A    D. 

19 — ,  and  shall  continue  twenty  years,  with  right  of  renewal  unless  sooner  dissolved 
by  a  three-fourths  vote  of  all  stock  subscribed  at  a  stockholders'  meeting.  The 
capital  stock  authorized  shall  be  Twenty-five  Thousand  Dollars,  and  all  stock  subscribed 
shall  be  payable  at  the  call  of  the  board  of  directors. 

ARTICLE  III. 

The  affairs  of  the  corporation  shall  be  conducted  by  a  board  of  five  directors, 
who  shall  hold  tjheir  offices  one  year,  and  until  their  successors  are  elected  and 
qualified. 

Said  directors  shall  elect  a  president,  and  a  secretary  and  treasurer,  who  shall 
hold  offices  one  year,  and  until  their  successors  are  elected  and  qualified. 


PROGRESSIVE  BUSINESS   ACCOUNTING  115 

ARTICLE  IV. 

The  election  of  the  directors  of  this  corporation  shall  be  held  at  the  office  of 

the  secretary  in  ,  ,  on  the  first  Tuesday  of  ,  19 — ,  and  annually 

thereafter.  At  all  elections  and  meetings  of  stockholders,  each  stockholder  shall  be 
entitled  to  one  vote  for  each  share  of  stock  held  by  him,  which  vote  may  be  cast  in 
person  or  by  proxy.  Ten  days'  notice  shall  be  given  of  all  called  or  special  meetings 
of  stockholders. 

ARTICLE  V. 

The  directors  of  this  corporation  until  the  first  regular  election  shall  be  

,  E.  E.  Clermont,  Burle  Van  Kleek,  Walter  A.  Gerrabrant,  and  George  Sherrill, 


who  shall  at  their  first  meeting  elect  a  president  and  a  secretary  and  treasurer. 

ARTICLE  Vr. 
The  private  property  of  the  members  of  this  corporation  shall  be  exempt  from 
the  debts  of  this  corporation. 

ARTICLE  VII. 
The  indebtedness  of  this  corporation  shall  not  at  any  time  exceed  Sixteen  Thou- 
sand Dollars. 

ARTICLE  VIII. 
No   alteration   or  amendment   to   these   articles   of   incorporation    shall   be   made 
unless  the  same  be  adopted  by  the  majority  stock  present  at  a  meeting  of  the  stock- 
holders called  for  that  purpose. 

Signatures : 


State  of ) 

)ss. 

County   of ) 

On  this  day  of  A.  D.  19 — ,  before  me  personally  appeared  

,  E.  E.  Clermont,  Burle  Van  Kleek,  Walter  A.  Gerrabrant,  and  George  Sherrill, 


to  me  known  to  be  the  persons  named  in  and  who  executed  the  foregoing  instrument, 
and  acknowledged  that  they  executed  the  same  as  their  voluntary  act  and  deed. 

[SEAL.]  

Notary  Public. 

The  second  meeting  of  the  promoters  held  transacts  business 

as  per  secretary's  minutes  below,  which  copy  in  minute  book. 

.  ,  Oct.  4.  19— 

At  a  second  meeting  of  the  promoters  of  The  Mercantile  Co.,  held  at 

the   office   of  ,   there   were   present  ,   E.   E.   Clermont, 

Burle  Van  Kleek,  Walter  A.  Gerrabrant.  and  George  Sherrill.  The  chairman  called 
upon  the  secretary  for  a  reading  of  the  minutes  of  the  previous  meeting,  which  were 
read  and  approved. 

The  secretary  then  read  the  articles  of  incorporation  prepared  by  him  as  directed 
in  the  previous  meeting,  a  copy  of  which  is  here  given  in  full.  (Here  copy  the  articles 
of  incorporation  complete.) 

Moved  by  ,  Clermont  seconding,  that  these  articles  be  adopted.     After 

discussion,  the  motion  was  unanimously  carried  and  the  articles  were  adopted  as  the 
articles  of  incorporation  of  this  association.  (Secure  the  signature  of  each  promoter 
to  the  instrument  and  have  same  acknowledged  by  a  notary  public.) 

On  motion  of  Van  Kleek,  seconded  by  Gerrabrant.  the  secretary  is  instructed 
to  file  the  articles  of  incorporation  for  record  with  the  county  recorder,  prepare  a 
notice  of  incorporation  for  publication  in  a  local  newspaper,  as  required  by  statute, 
and  take  all  other  necessary  steps  for  the  completion  of  the  incorporation. 

Meeting  adjourned  on  call   of  the   president. 

— ,  Secretary. 

Fourth  Step.  Prepare  a  notice  of  incorporation  for  publication,  as 
directed  in  the  following  form: 


116  PROGRESSIVE  BUSINESS   ACCOUNTING 

NOTICE   OF    INCORPORATION. 

To  Whom  It  May  Concern: 

Notice  is  hereby  given  that  the  undersigned  have  associated  themselves  together 
as  a  corporation,  under  and  by  virtue  of  chapter  one,  title  nine,  of  the  Code  of  Iowa, 
and  the  laws  amendatory  thereto,  as  a  corporation,  and  have  adopted  articles  »f 
incorporation  which  provide  as  follows,  to-wit: 

1.  The   name   of   the   corporation    is    "The   Mercantile    Company,"    and 

its  principal  place  of  transacting  business  is ,  . 

2.  The  general  nature  of  the  business  to  be  transacted  by  said  corporation  is 
the  purchase  and  sale  of  merchandise,  and  such  other  business  as  may  be  contrib- 
utory thereto. 

3.  The  amount  of  the  capital  stock  authorized  by  the  articles  of  incorporation 
is  Twenty-five  Thousand  Dollars,  which  is  to  be  paid  in  at  call  of  the  board  of  directors 
without  condition. 

4.  That   the   said    corporation    shall    commence    business    on    the day   of 

A.  D.  19 — ,  and  continue  for  twenty  years  with  right  of  renewal. 

5.  The   affairs   of   this   corporation   are   to   be   conducted   by   five   directors,   who 

are  to  be  elected  on  the  first  Tuesday  of  annually,   at  which  election  each 

stockholder  shall  be  entitled  to  one  vote  for  each  share  of  stock  owned,  w*hich  vote 

may  be  cast  in  person  or  by  proxy;  and  until  such  election,  to  be  held  in ,  19 — , 

the  following  named  persons, ,  E.  E.  Clermont,  Burle  Van  Kleek,  Walter 

A.  Gerrabrant,  and  George  Sherrill,  shall  be  directors  of  said  corporation;  and  the 
directors  at  the  first  meeting  in  each  year  shall  elect  from  their  own  number  a 
president,  and  a  secretary  and  treasurer,  who  shall  hold  their  office  during  the  pleasure 
of  said  board. 

6.  That  the  highest  amount  of  indebtedness  to  which  said  corporation  shall  at 
any  time  subject  itself  shall  not  exceed  Sixteen  Thousand  Dollars. 

7.  That  the  private  property  of  the  members  of  such  corporation  shall  be 
exempt  from   ihe   debts  of  said   corporation. 

Signatures  of  Incorporators: 


Fifth  Step.  File  the  articles  of  incorporation  with  the  county  recorder, 
paying  a  filing  fee  of  $1.20.  Order  the  publication  of  the  articles  of  incor- 
poration in  a  local  paper  and  pay  for  same  $4.50.  After  record  by  the 
county  recorder,  send  the  articles  of  incorporation  with  a  state  recording 
fee  of  $40,  by  draft  (exchange  10  cents)  to  the  secretary  of  state,  with  a 
letter  stating  that  the  articles  of  incorporation  are  sent  for  record  and  that 
the  statutory  fee  is  enclosed. 

This  cash  paid  from  your  private  funds  must  be  carefully  entered  in  a 
bill  which  you  will  present  for  payment  as  soon  as  the  corporation  has  funds 
to  pay  it. 

Sixth  Step.  Receive  from  the  secretary  of  state  the  Certificate  of  Incor- 
poration. You  are  now  entitled  to  commence  business  as  a  corporation. 
A  meeting  of  the  board  of  directors  may  now  be  called  for  the  purpose  of 
deciding  the  amount  of  the  first  installment  on  stock  subscription. 

Seventh  Step.  Enter  in  your  minute  book  the  record  of  a  meeting  of 
the  directors  in  which  the  following  business  is  transacted: 

1.  The  minutes  of  the  previous  meeting  are  read  and  approved. 

2.  George  Sherrill  is  elected  president,  and  Student,  secretary  and 
treasurer. 


PROGRESSIVE  BUSINESS   ACCOUNTING 


117 


3.  The  secretary  and  treasurer  is  instructed  to  take  full  charge  of  the 
business  of  the  corporation  and  conduct  the  same  as  ordinarily  conducted, 
for  which  service  he  is  to  receive  a  salary  of  $250  per  month. 

4.  A  call  of  25  per  cent  of  the  capital  stock  is  to  be  paid  by  the  stock 
subscribers. 

C  2.  Opening  Entries :  Enter  in  the  journal,  as  directed  in  Ex.  XX., 
the  opening  stock  accounts,  debiting  Subscription  and  Unsubscribed  Stock 
and  crediting  Capital  Stock.    Post  to  the  general  ledger. 

Open  accounts  with  each  subscriber  in  the  installment  ledger,  and  post. 
Index  the  accounts  like  the  following:  "Manning,  J.  Instal.  a/c,"  etc.  Open 
accounts  with  each  signer  of  the  stock  subscription  agreement  in  the  .stock 
ledger  and  credit  these  accounts  with  the  par  value  of  their  shares. .  Index 
such  accounts  like  the  following:     "Manning,  J.  Stock  a/c,"  etc. 

C3.  Collect  cash  of  E.  E.  Clermont,  Walter  A.  Gerrabrant,  and  George 
Sherrill  for  their  first  installments  of  25  per  cent. 

"Write  for  each  installment  receipts  as  per  form  below;  secure  signatures 
on  stub  and  deliver  the  receipts  when  the  cash  is  paid;  enter  in  cash  book, 
and  post  to  general  and  installment  ledgers. 


INSTALLMENT  CERTIFICATE 

No.../..... 

„ ^^?^^.^.^...I9^ 

Inttallment  No. ./. 

Per  Cent  .-^.sfTI. 

Hoot  Shara.S:^^..... 

Amount,  i.' 
Rtceived  theyOlTathedCfrtificatt 


Amount,  %/-^^JIli2s. 

INSTALLI^ENT  CERTIFICATE  .NO.^1 


STALLME 


^.J~~<:? 


-Shares 


The  Manning  Mercantile  Company 


THIS  CERTIFIES  Thai 


j^:^ 


Chicago^ 


19^ 


has  tohiicredil  in  the  treasury  of  this  Company  the  s\im  of 


)LLARS, 


^  1  the  same  being  theZ=<^^instal!ment  pf-^^^er  cent  o\^~^^   shares  due ^-^^--<^'^^T^     1 9^^ 

Thij  Ccctiiicate  ii  transferable  only  on  the  books  of  ihis  Company,  upon  surrender  of  same  by  the  holdcr^r  his 
lawful  representative. 

IN  EVIDENCE  it^LRLOF  we  have  duly  affised  our  signatures  and  the  corporate  seal 


-Mercantile 


C  4.     Deposit  the  cash  received  to  the  credit  of  The  

Co.,  and  leave  your  signature  of  firm  name  by  your  name,  Treasurer. 

C  5.  Present  your  personally  receipted  bill  for  cash  expended  in  the 
organization  of  the  corporation. 

Write  a  check,  signing  it  "The  Mercantile  Company,  by  

Treas.,"  in  favor  of  yourself  personally  which  you  are  to  receive  as  payment. 

Mark  the  bill  "Voucher  #1"  and  place  in  vouchers  paid  file. 

C  6.  Enter  by  items  in  the  purchase  book  a  purchase  from  Burle  Van 
Kleek  of  the  following  stock  of  goods  and  post  the  amount  to  his  credit  in 
the  purchase  ledger:  1  pc.  Suiting,  331/2  yd.  @  75c;  3  pc.  Swiss,  172  yd.  @ 
7c ;  3  pc.  Swiss,  I8614  yd.  @  7c ;  5  pc.  Swiss,  2371/2  yd.  @  7c ;  5  pc.  Swiss, 
2673/4  yd.  @  7c;  30  pc.  Brown  Crash  AA,  1,200  yd.  @  Gi/oc;  25  pc.  Brown 
Crash  AE,  1,000  yd.  @  7i^c ;  20  pc.  Brown  Crash  BB,  800  yd.  @  8c ;  6  pc. 
Cream  Cord,  206i/s  yd.  @  25c;  11  pc.  Suiting,  361%  yd.  @  271/2C;  5  pc. 
Suiting,  2041/2  yd.  @  I21/2C;  31  pc.  Wash  Goods,  1,0263/4  yd.  @  S^/gC;  2  pc. 
Jamestown  Suitings,  48%  yd.  @  85c ;  3  pc.  Jamestown  Suitings,  76  yd.  @ 
70c;  6  pc.  Jamestown  Suitings,  152  yd.  @  721/2C;  201/2  doz.  Hose  #503,  per 
doz.,  $2.10;  31/2  doz.  Hose  #505  per  doz.  $2.10;  7  doz.  Hose  #226  per  doz. 


118  PROGRESSIVE  BUSINESS  ACCOUNTING 

$1.50;  1/2  doz.  Hose  #857  per  doz.  $3.05;  II/2  doz.  Hose  #859,  per  doz.  $2.75; 
314  doz.  R.  G.  Corsets  #671  per  doz.  $8.50;  1/3  doz.  R.  G.  Corsets  #290, 
per  doz.  $24 ;  11/12  doz.  R.  G.  Corsets  #440,  per  doz.  $12 ;  2-5/12  doz.  R.  G. 
Corsets  #661,  per  doz.  $8.50;  1/3  doz.  R.  G.  Corsets  #906,  per  doz.  $8.50; 
3-5/12  doz.  R.  G.  Corsets  #663,  per  doz.  $8.50;  3  Empire  Skirts  #515  @ 
$4.50;  3  Emp.  Skirts  #521  @  $5.50;  3  Emp.  Skirts  #407  @  $4.50;  3  Emp. 
Skirts  #248  @  $6.50;  2  Emp.  Skirts  #501  @  $4;  1  Emp.  Skirt  #417  @  $9; 
6  Emp.  Skirts  #523  @  $2.50;  328  doz.  J.  &  P.  Coats  Thread,  per  doz.  55c; 
15  bx.  Crawford's  Linen  Floss,  per  box,  67c;  60  Sheets  72x90  "Pepp."  @ 
433^c;  120  Pillow  Cases  45x36  "Star"  @  8c;  120  P.  Cases  42x36  Star  @ 
73^0;  60  P.  Cases  42x36  "Fearless"  @  834c;  24  P.  Cases  42x36  "Clio"  @ 
1134c;.60  P.  Cases  45x36  "Gold  Medal"  @  I51/2C;  25  doz.  Napkins  18x18, 
per  doz.  34i/2C;  41  pc.  Figured  Vienna  Silkaline,  2,1191/4  yd.  @  71/20;  7  pc. 
Plain  V.  Silkaline,  34514  yd.  @  6c;  16  pc.  French  Muslin,  900  Vd.  @  834c; 
1  pc.  Elton  Burlap,  291/2  yd.  @  I21/2C;  2  pc.  Cypress  Plymouth  Denim,  1213^ 
yd.  @  91/^c;  3  pc.  Hungarian  Cloth,  123%  yd.  @  15c;  4  pc.  Figured  Dimity, 
21034  yd.  @  I21/2C;  2  pc.  Zephyr  French  Taffeta,  117  yd.  @  I21/2C;  4  pc. 
Dundee  Burlap,  163  yd.  @  9c;  4  pc.  Ragaline  Crepe,  IO9I/2  yd.  @  15c;  1/2  doz. 
Drawers,  per  doz.  $13.50 ;  3  doz.  Gowns,  per  doz.  $9 ;  1/3  doz.  Gowns,  per  doz. 
$21;  1/12  doz.  Gowns,  per  doz.  $54;  15  Butterick  Patterns  @  5c;  12  Butterick 
Patterns  @  71/2C. 

When  forwarding,  do  not  carry  the  partial  total  into  the  second  column. 

NOTE. — The  student  will  observe  that  after  posting  the  above  there  will  appear 
three  accounts  in  separate  ledgers  under  the  title  Burle  Van  Kleek.  Notice  that  these 
accounts  are  kept  for  entirely  separate  purposes  and  should  not  be  confused. 

0  7.  Burle  Van  Kleek  is  allowed  to  apply  $250  of  his  credit  in  the 
purchase  ledger  as  a  tirst  payment  on  stock  account.  Issue  to  him  an  install- 
ment receipt  and  make  the  journal  entry.  Post,  debiting  account  in  purchase 
ledger  and  crediting  account  in  installment  ledger.  Also  credit  subscription 
account  in  general  ledger. 

0  8.     Pay  in  your  first  installment  in  cash  and  take  installment  receipt. 

C  9.     Deposit  $2,450. 

INFORMATION  #160.  (Review  #125.)  A  mortgage  is  the  conveyance 
of  property  for  the  purpose  of  securing  the  payment  of  money,  or  the  per- 
formance of  some  other  obligation. 

Personal  property  is  conveyed  by  chattel  mortgage ;  real  property  is 
conveyed  by  real  estate  mortgage.  The  person  giving  the  mortgage  is  called 
the  mortgagor,  and  the  one  to  whom  it  is  given  is  called  the  mortgagee. 
A  real  estate  mortgage  is  executed,  delivered  and  recorded  in  the  same  way 
as  a  deed  is.  A  mortgage  contains  two  parts:  (1)  the  conveyance  of  property 
like  a  deed,  (2)  the  stipulation  that  such  conveyance  shall  be  void  if  the 
mortgagor  pays  a  certain  sum  of  money  or  does  some  other  specified  act. 

INFORMATION  #161.  Real  property  is  frequently  bought  for  part 
cash  and  part  notes.  "When  so  bought,  the  property  should  be  conveyed 
to  the  buyer  by  deed,  and  should  then  be  reconveyed  to  the  seller  by  mort- 
gage. The  mortgage  is  to  be  canceled  when  the  notes  are  paid.  If  the 
maker  should  fail  to  pay  the  notes,  certain  legal  steps  could  be  taken  whereby 
the  property  would  be  sold  at  public  sale  and  the  proceeds  be  used  to  pay 
the  mortgage  indebtedness  and  any  remainder  passed  to  the  mortgagor. 

C  10.     Buy  of  James  P.  Hess  (unmarried)  the  following  property  which 


PROGRESSIVE   BUSINESS   ACCOUNTING 


119 


will  be  used  for  your  business  purposes:     Lot  No.  Eight   (8)   in  Block  No. 

Thirty-one   (31)   of  City.     Make  a  consideration  of  $14,000,  to  be 

paid  as  follows:  Cash  by  check,  $4,000;  four  notes  of  $2,500  each,  payable 
in  one,  two,  three,  and  four  years  from  date,  drawing  six  per  cent  from  date 
interest  payable  annually,  and  the  notes  secured  by  mortgage  on  the  property 
purchased. 

C  11.     Fill  the  following  papers : 

The  deed  from  James  P.  Hess  to  The Mercantile  Company.    Your 

check  and  four  notes  payable  at  the  bank  to  James  P.  Hess.  Your  mortgage 
securing  the  notes,  signed  by  president  and  yourself  as  secretary  and  treas- 
urer. Have  the  deed  and  mortgage  acknowledged  before  a  notary  public, 
paying  a  fee  of  50  cts.  in  currency.  Have  the  deed  and  mortgage  recorded, 
paying  a  fee  of  $2  currency.  Make  journal  entry  of  the  transaction  and 
post. 

012.  Enter  in  the  secretary's  minute  book  a  record  of  a  meeting  of 
the  board  of  directors  at  which  four  directors  were  present.  They  vote 
to  call  upon  subscribers  for  a  second  installment  of  50  per  cent  of  the 
capital  stock  to  be  paid  within  ten  days. 

0  13.  Write  an  installment  receipt  in  favor  of  each  subscriber  except 
the  one  having  a  credit  in  the  purchase  ledger,  for  50  per  cent  of  the  sub- 
scription, and  collect  cash.    Enter  and  post.    Deposit  the  cash  received. 

C 14.  Charge  the  purchase  ledger  account  of  Burle  Van  Kleek  a  sufficient 
amount  to  pay  his  subscription  in  full.  His  full  payment  entitles  him  to  a 
certificate  of  stock.  Before  issuing  the  certificate  of  stock,  have  him  return 
the  installment  receipt  issued.  Paste  this  to  the  stub.  Issue  certificate  of 
stock  No.  1,  using  the  form  here  given  as  a  model.  ,  Transfer  the  certificate 
number  to  the  stock  ledger  account.  After  posting,  rule  up  his  installment 
account,  as  it  is  in  balance. 


Cirtificatt  No. 


/ 


i2^;2^^ 


.  Shares, 


.^S-&.d2^££=ii^^=^=*^ 


.^^^ 


rq^ 


Rtceivid  CntifuauNo Z_ 


for_ 


is^^^^ay  of  i^^^l^et^-^^-g-^p^f^ 


r 

■  (0 


%%  WWV%  %*%%^'WV%%WV*%VW*%^%*% 


The  Manning  Mercantile  Company 


Chb  €ertlfl«^,Iliati 

is  the  owner  of 


Capital  Stock  %^^^^i^  ^  ^"^  . 

Shares,  of'the  Capital  Stock 


fully  paid,  transferable  only  on  the  Books  of  the  Corporation,  by  him  or  his  attorney,  upon  sur- 
render of  this  Certificate. 

In  Witness  Whereof  the  officers  of  this  Corporation  have  hereunto  subscribed  their 

i(    names  and  ca_^sed  the  corporate  Seal  to  be  hereto  affixed  at_ 
\this- 


ly  nf  ^:^<^Jgi>-<^^<i-^>^g^^ 


.,j'.^c^^-^^.^^g^^^^^^^<i:^^ 


C  15.  Pay  Burle  Van  Kleek  a  check  for  the  balance  of  his  account  in 
the  purchase  ledger.    Post  and  rule  the  account. 

C  16.  Buy  of  Calhoun,  Robbins  &  Co.,  City,  20  pc.  gingham,  5  pc.  un- 
bleached muslin.    Use  order  blank,  receive  invoice,  enter  as  Voucher  #2. 

C  17.  Sell  W.  R.  Johnson,  City,  the  following  goods  on  acct.  2/10  n/30. 
Enter  in  sales  book  and  bill,  using  the  bill  received  in  C16  as  a  model: 
6  pc.  Suiting,  34,  83,  331/2,  31,  30^4,  3214,  at  35  cts.  per  yard;  5  pc.  Swiss, 


120 


PROGRESSIVE   BUSINESS   ACCOUNTING 


45,  43,  52,  51,  461/2,  at  9  cts. ;  3  Empire  Skirts  #521  at  $6.50;  2  Empire  Skirts 
#501  at  $5.50. 

C  18.  Sell  H.  A.  Payne,  City,  as  above,  10  doz.  Hose  #503  at  $2.90  per 
doz.;  11/2  doz.  Hose  #505  at  $2.95;  1/2  doz.  Hose  #857  at  $4.10;  3  Empire 
Skirts  #515  at  $4.50;  6  Empire  Skirts  #523  at  $3.25. 

INFORMATION  #163.  (Review  #130.)  Firms  that  ship  merchandise 
to  customers,  before  delivering  the  packages  to  the  transportation  company, 
.should  prepare  triplicate  shippers'  receipts,  on  which  is  written  the  address 
of  consignor,  the  address  of  consignee  and  a  description  of  the  shipment. 
The  interstate  commerce  commission  has  prescribed  a  form  to  be  used  by  all 
common  carriers,  called  a  non-negotiable,  straight  bill  of  lading.  Triplicate 
copies  are  made  in  order  that  one  signed  by  the  agent  of  the  company  may 
be  retained  by  the  shipper  as  a  receipt,  one  may  be  sent  by  the  shipper  to 
the  consignee,  and  one  may  be  retained  by  the  freight  agent  to  complete 
his  records.  One  original  and  two  carbon  copies  are  used  for  this  purpose. 
See  form. 

Railroad!  Company        y 
STRAIGHT  BILL  OF  LADING-ORIGINAL-NOT  NEGOTIABLE.  A,Irf.N«. 

effect  on  ihe  dmu  ot  Iss^ue^W^U  Orlglwl  llll  ol  Udiag.  M  ^^  yj       ^yf 

the  property  deaorlbei^betow,  lo  ac^iarent  good  order,  exoept  u  doimI  (oonteata  aod  oooditloo  of  contents  ol  package s^okoown),  marked.  ooDsigned  and  destined  as  In* 
Otcated  below,  which  aald  company  agraes  to  carry  to  Its  usual  place  of  delivery  at  said  destination.  If  on  Its  road,  otherwise  to  deliver  to  andiber  carrier  on  the  route  10 
aald  desttnatloa  It  Is  mutually  agreed,  as  10  each  carrier  of  all  or  any  of  a»ld  property,  over  all  br  any  i>ortton  of  said  route  to  destination,  and  as  to  each  party  at  any 
lime  Interested  in  a'l  or  any  of  said  property,  that  every  servioe  to  be  performed  hereunder,  shall  be  subject  to  all  the  oondltioDS.  wither  printed  or  written,  hcrela 
^IT10l«>it3Mai  HEF"-- " • ' "*" ^ 


ooDtalned  (INCLUOIMO  CONOITIOWS 
The  rate  of  freight  from.. 


by  the  shlppep^W^  accepted  for  himself  and  Ms  usigns. 


Is  In  Cents  per  100  lbs. 


Timwiil    IFtrtCIlM     If  »<CI«H  I   IFKiiUCT   I  If  3ilCllM~   If  WyUte       IF  Ruir^g   I  If  4IIiCHm     irtthClm     lfttt>CUM[       if^«cl«l      |      IF  (vmUI 


^ 


Route- 


State  of 


...Car  Initial 


/ 


DESCRIPTION  OF  ARTICLES  AND  SPECIAL  MARKS 


WEIGHT  CLUtO*       CHSCK  IfchargM  are  toJwprepild.  writ* 

(««W«H.e.r,«M«»        »ATt         COLUMN      or  .Ump  her.    To  b.  f  r.p.Ul." 


//^^ 


Jf 


Received  »._,.._£_ _ 

to  apply  In  prepayment  of  the  char- 
BM  oo  the  proper ty  desorlbad  hereon. 

AirentorOaahlar. 

rwt . 

(The  tltnature  here  aokoowiedget 
only  the  amount  prepaid.) 

Charges  Ady 

.Agent 


INFORMATION  #164.  When  goods  are  offered  to  the  carrier  for  ship- 
ment, great  care  should  be  exercised  in  directing  the  cases  properly.  The 
address  of  the  shipper,  the  direction  to  the  consignee,  the  route  over  which 
shipment  is  to  be  made,  whether  freight  is  prepaid  or  to  be  collected  at 
destination,  should  all  be  plainly  printed  on  the  box.  The  form  is  given  in 
model. 

C  19.  Sell  G.  II.  Brown  &  Son,  Brownville,  your  state,  ship  via  B.  C. 
Railway,  terms  2/10  n/30 :  1  pc.  Suiting  331/2,  at  75  cts ;  15  pc.  Brown  Crash, 
39,  381/4,  411/4,  421/4,  41,  401/2,  4II/4,  383/4,  391/2,  40,  40,  4II/4,  4II/4,  391/2,  401/2, 
at  71/2  cts  ;  weight  440  lb. 


PROGRESSIVE  BUSINESS   ACCOUNTING  121 

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Direct  the  shipping  case  properly.  Make  out  triplicate  bills  of  lading. 
Enter  sale  in  sales  book  and  fill  out  bill.  Deliver  the  shipment  to  freight 
agent  and  secure  his  receipt.  Enclose  bill  and  receipt  in  envelope  properly 
directed.  Place  your  return  address  in  upper  left  hand  corner  and  place 
letter  in  post  office.    Post  the  sales  book  entry  to  the  sales  ledger. 

C  20.  Sell  H.  "Wester,  Jesup,  your  state,  1  pc.  Figured  Dimity,  52  yd. 
at  141/2  cts. ;  2  pc.  Dundee  Burlap,  41  and  41  yd.  at  11  cts. ;  2  pc.  Ragaline 
Crepe,  60  yd.  at  18  cts;  5  pc.  Plain  Vienna  Silkaline,  49,  51,  49^/2,  513^,  49^4, 
at  8  cts.    Weight  280  lb.    Proceed  as  in  C19. 

INFORMATION  #165.  The  student's  attention  is  directed  to  the  use 
of  contra  columns  in  the  cash  book.  A  contra  column  contains  items  that 
appear  on  the  side  of  the  cash  book  opposite  to  the  side  from  which  they 
should  be  posted.  Their  purpose  is  to  save  labor  by  shortening  entries. 
For  example,  if  we  pay  John  Smith's  bill  of  $100  less  a  discount  of  2  per 
cent,  the  amount  of  cash  given  is  $98.  Without  the  use  of  contra  discount 
columns  in  the  cash  book,  a  journal  entry  would  be  required  debiting  John 
Smith  $100;  crediting  Cash  $98,  and  Mdse.  Disct.  $2.  The  cash  entry  would 
then  be  posted  to  the  cash  book.  (See  Infor.  #85.)  The  same  result  is 
obtained  if  an  entry  is  made  on  the  credit  side  of  the  cash  book,  debiting 
John  Smith  $100  in  the  proper  column  and  entering  the  discount,  $2.00,  in 
a  separate  column  headed  Mdse.  Disct.  This  discount  is  really  a  credit  and 
like  all  other  credits,  would  naturally  be  found  on  the  debit  side  of  Cash. 
At  the  time  of  balancing  the  cash  book,  the  total  of  such  discounts  is  carried 
to  the  debit  general  column  of  the  cash  book.  The  effect  of  adding  it  in  the 
opposite  debit  side  is  to  reduce  the  cash  total  credit  on  such  payments  to 
the  amount  actually  paid.  The  total  of  Mdse.  Disct.  thus  carried  to  the  debit 
side  is  posted,  as  are  all  other  items  in  the  general  debit  column,  to  the 
credit  side  of  the  ledger. 

Likewise  a  contra  discount  column  on  the  debit  side  of  the  cash  book 
contains  amounts  of  discount  allowed  others.  The  total  of  this  column  at 
balancing  is  carried  to  the  credit  general  column  of  cash  book  and  is  from 
that  posted  with  all  other  items  in  the  credit  general  column  to  the  ledger 
debit. 

The  result  of  using  contra  discount  columns  is  that  entries  like  those 
mentioned  can  be  placed  on  one  line  of  the  cash  book  without  the  use  of 


122  PROGRESSIVE  BUSINESS   ACCOUNTING 

the  journal,  and  that  all  the  discounts  of  a  given  period  can  be  posted  in 
one  amount  instead  of  one  item  at  a  time. 

0  21.  Pay  Voucher  :^2  by  check  after  deduction  of  2%  discount.  Have 
bill  receipted.  Enter  the  full  amount  of  the  bill  to  the  firm's  debit  in  the 
accounts  payable  column  of  the  cash  book  and  the  discount  in  the  Mdse. 
Disct.  column.  Post  the  entire  amount  to  their  ledger  debit  and  show  in  the 
explanatory  space  the  amount  of  discount  received,  thus,  "D.  1.74." 

C  22.  Collect  cash  of  H.  A.  Payne  for  the  amount  of  his  bill  less  2%. 
Make  a  like  entry  in  the  cash  book  debit  side  and  post.  Do  not  fail  to  give 
receipt. 

C  23.  Send  orders  for  goods  to  five  firms,  preparing  each  order  as 
follows : 

1.  Enter  in  the  duplicate  order  blank. 

2.  "Write  a  letter  stating  that  your  company  was  recently  incorporated 
with  $25,000  capital  stock  to  engage  in  the  dry  goods  business,  and  that 
you  desire  to  open  an  account  with  a  debit  balance  not  to  exceed  $2,000 
at  any  one  time.  State  that  you  have  funds  sufficient  to  discount  bills  and 
you  expect  to  do  so.  State  that  you  enclose  an  initial  order.  Eequest  an 
immediate  acknowledgment  of  the  order,  also  prompt  shipment  and  most 
favorable  terms. 

Order  of  Valantine  &  Bentley,  Boston,  Mass. 
50  pc.  English  Mohair. 
50     "    Jacquarde  Madras. 
50     "    English  Corded  Prunella. 
20     "    Directoire. 
20    "    Sharkskin. 
30     "    Nainsook. 
Order  of  P.  K.  Wilson  &  Son,  Cincinnati,  Ohio. 
20  pc.  French  Serge  Eaye. 
30    "    Percale. 
3     ''    Wool  Taffeta. 
2     "    Table  Linen. 
Order  of  Broadhead  Worsted  Mills,  Oswego,  N.  Y. 
50  pc.  Storm  Serge. 
20     "    Broadcloth. 
20     "    Granite  Cloth. 
20     "    Cashmere. 
Order  of  F.  A.  Foster  &  Co.,  New  York. 
100  pc.  Botany  Twill. 
100    "    Toweling. 
Order  of  Folwell  Bros.  &  Co.,  Chicago. 
100  pc.  Crown  Lining. 
70     "    Brown  Sheeting.  , 

25     "    Dimity. 

C  24.     Sell  Berg  &  Bowers,  Independence,  ,  on  acct.,  60  days  or 

3%  ten  days:  5  pc.  Figured  Vienna  Silkaline,  49,  51,  521/4,  50,  481/2  yd.  @ 
9  cts;  5  doz.  Napkins  18x18,  per  doz.  48  cts;  1  doz.  P.  Cases  42x36  "Clio" 
(5)  $2 ;  1  pc.  Elton  Burlap,  291/2  yd.  @  16  cts.    Per  B.  C.  Railway.  290  lb. 

0  25.  Sell  Unsubscribed  Stock  of  the  company  to  Leo  A.  Boyce,  ten 
shares,  and  C.  Bolster,  five  shares,  receiving  cash  at  par.    Issue  to  them  stock 


PROGRESSIVE  BUSINESS   ACCOUNTING  123 

certificates  Nos.  2  and  3.  Open  accounts  with  them  in  the  stock  ledger,  and 
post  to  the  stock  ledger  accounts  from  the  stub  of  the  stock  certificate  book. 
Make  entry  in  cash  book  and  post  to  the  general  ledger. 

C26.  Burle  Van  Kleek  has  sold  his  ten  shares  of  stock  (Cert.  #1)  to 
C.  Bolster  and  desires  that  a  transfer  be  made  on  the  books  of  the  company. 
Secure  Van  Kleek 's  certificate,  indorse  on  the  back  his  assignment  in  these 
words:  "For  value  received,  I  hereby  assign  and  transfer  unto  C.  Bolster 
my  right,  title,  and  interest  in  the  within  ten  shares  of  stock."  Secure  Van 
Kleek 's  signature  to  the  assignment.  Then  fill  out  certificate  No.  4  in  favor 
of  C.  Bolster.  The  stub  must  show  from  whom  transferred.  Hand  Bolster 
the  new  certificate.  Paste  the  old  certificate  to  its  stub  and  write  "Canceled" 
across  the  face.  No  cash  is  received  or  given  by  the  company.  The  record 
of  the  transfer  will  be  complete  after  you  have  posted  to  the  stock  ledger 
from  the  stub  of  the  stock  certificate  a  debit  to  Van  Kleek  (rule  his  account) 
and  a  credit  to  Bolster  (give  certificate  number). 

Enter  in  the  minute  book  the  record  of  a  meeting  of  the  directors 
in  which  it  is  voted  to  call  on  the  stockholders  for  payment  of  an  installment 
of  the  remaining  25  per  cent  due  on  stock  subscription. 

C  27.  Collect  cash  of  subscribers  for  all  unpaid  subscriptions.  Take 
up  their  installment  certificates,  cancel  and  paste  to  stubs.  Issue  certificates 
of  stock  Nos.  5,  6,  7,  and  8,  to  each  in  the  order  of  their  ledger  accounts. 
Post  and  rule  the  installment  ledger  accounts.  From  the  stock  certificate 
book  transfer  the  certificate  numbers  to  the  respective  accounts  in  the  stock 
ledger. 

C  28.  Sell  L.  E.  Scott,  Manchester,  terms  3/10  n/60,  15  pc.  Suiting,  30, 
37,  383^,  371/2,  3734,  363^,  361/2,  361/2  38,  36,  35,  36,  36I/2,  37,  36  yd.  @  14  cts. 
Via  B.  C.  Ry.,  300  lb. 

Sell  Runner  &  Stone,  La  Porte,  ,  terms  3/10  n/60,  20  sheets 

72x90  @  65  cts;  50  P.  Cases  45x36  "Star"  @  12  cts;  7  doz.  Hose  #226  @ 
$2.10  per  dozen;  8  bx.  Crawford's  Linen  Floss  @  83  cts.  Via  B.  C.  Ry., 
195  lb. 

Sell  G.  H.  Brown  &  Son,  Brown ville,  ,  terms  3/10  n/60,  10  pc. 

French  Muslin,  491/2,  5014,  483^,  5II/2,  491/2,  483^,  5014,  5II/2,  491/4,  5034  yd. 
@  10  cts;  1  pc.  Jamestown  Suiting,  48%  yd.  @  99  cts;  1  doz.  R.  G.  Corsets 
#671  @  $9.75  per  doz.;  1/2  doz.  R.  G.  Corsets  #440  (g  $15  per  doz.  Via 
B.  C.  Ry.,  480  lb. 

Sell  Berg  &  Bowers,   Independence,  ,  terms  3/10  n/60,   5  pc. 

Suiting,  371/4,  38,  3714,  36,  38  yd.  @  14  cts;  15  sheets  72x90  @  65  cts;  20  P. 
Cases  45x36  "Star"  @  12  cts;  3  pc.  Suiting,  58,  591/2,  541/2  yd.  @  10  cts; 
3  pc.  Cream  Cord,  103  yd.  @38  cts;  15  pc.  Brown  Crash,  391/4,  401^,  41,  4II/2, 
40,  3834,  391/2,  421/4,  3734,  4314,  383/4,  4114,  43,  4II/2,  271/4  yd.  @  81/2  cts. 
Via  B.  C.  Ry.,  595  lb. 

Sell  W.  R.  Johnson,  City,  terms  2/10  n/30,  2  pc.  Suiting  4014  and  41 
yd.  @  151/2  cts;  30  P.  Cases  45x36  "Star"  @  12  cts;  10  sheets  72x90  @ 
65  cts ;  20  doz.  J.  &  P.  Coats  Thread  @  56  cts.  per  doz ;  7  bx.  C.  Linen  Floss 
@  83  cts.    Deliver. 

C29.  The  Farrier-Miller  Co.  present  a  statement  covering  material  and 
labor  to  date.  The  amount  is  correct.  Pay  the  statement  by  check.  See 
that  it  is  properly  receipted  and  give  it  voucher  number.    File. 


124  PROGRESSIVE  BUSINESS  ACCOUNTING 

0  30.     Pay  Foskett  &  Co.'s  bill. 

C  31.  A  list  of  expense  items  is  here  given.  Make  out  a  check  for 
each.  "Write  on  lower  left  corner  of  check  the  purpose  for  which  given. 
Charge  in  cash  book  by  items: 

Wm.  Farrell,  salary  to  date,  $20;  C.  F.  Tomlinson,  salary  to  date,  $12; 
Perry  Hargraves,  salary  to  date,  $8;  W.  W.  Dole,  salary  to  date,  $18;  City 
Light  &  Power  Co.,  bill  to  date,  $7.30;  Star  Sign  Painting  Co.,  for  services, 
$18.60;  W.  K.  Cole,  P.  M.,  for  stamped  envelopes,  $42:90. 

0  32.  Ship  Dollman  &  Co.,  Crawford  Junction,  per  U.  S.  Express, 
C.  0.  D.,  the  following  bill :  5  pc.  Swiss  Suiting,  51,  531/2,  5214,  54,  57  yd. 
(a)  10  cts;  15  sheets  72x90  @  65  cts;  20  P.  Cases  45x36  @  12  cts;  3  pc.  Cream 
Cord,  33,  34,  36  yd.  @  38  cts;  5  pc.  Suiting,  24,  24,  25%,  241/4,  26  yd.  @ 
151/2  cts. 

DIREOTIONS.  Read  Infor.  #150.  Bill  the  goods,  terms  C.  0.  D. 
Address  the  package  as  you  would  for  a  freight  shipment,  routing  it  U.  S. 
Express.  Place  in  upper  right-hand  corner  "C.  O.  D.  $97.21."  Place  the 
bill  in  an  express  C.  O.  D.  envelope  (do  not  seal),  attach  the  envelope  to  the 
case,  and  deliver  to  the  express  agent,  taking  his  receipt. 

Open  an  account  with  C.  O.  D.'s  in  sales  ledger  (fifth  place  on  page  12) 
and  post  to  debit  of  this  account  (see  form,  page  99). 

0  33.     Ship  by  freight  C.  O.  D.  to  Denecke  &  Yeoman,  Perry,  : 

3  pc.  Swiss  Suiting,  621^,  641/2,  59i/o  yd.,  @  10  cts;  12  P.  Cases  42x36 
(a)  18  cts ;  20  doz.  Napkins  18x18  @  48  cts.  per  doz. ;  6  pc.  Brown  Crash,  39,  39%, 
41,  401/2,  41,  373^  yd.  @  914  cts;  3  pc.  Jamestown  Suitings,  25,  25,  26  yd. 
@  90  cts.    Via  B.  C.  Ry.,  510  lb. 

DIREOTIONS.  Bill,  terms  C.  O.  D.  Address  the  case  to  your  firm, 
write  on  case  "Notify  Denecke  &  Y6oman. "  Deliver  the  case  to  freight 
agent,  taking  an  order  bill  of  lading  signed  by  agent.  Write  on  bill  of 
lading  "Notify  Denecke  &  Yeoman,"  and  sign;  draw  a  sight  draft  for  the 
amount  on  Denecke  &  Yeoman,  attach  the  bill  of  lading  to  the  draft,  leave 
draft  and  attached  bill  of  lading  at  the  bank  for  collection,  mail  the  bill 
to  Denecke  &  Yeoman. 

Post  to  C.  0.  D.  account. 

0  34.     Ship  Falstatf  Dry  Goods  Co.,   Grundy   Center,  ,   C.  0.  D. : 

101/2  doz.  Hose  #503  @  $2.60;  1  doz.  Hose  #505  @  $2.67;  II/2  doz.  Hose 
#859  @  $3.22;  214  doz.  R.  G.  Corsets  #671  @  $12.20;  1/3  doz.  R.  G.  Corsets 
#29  @  $27;  5/12  doz.  R.  G.  Corsets  #440  @  $13.80;  3  Empire  Skirts  #407 
@  $6;  3  Empire  Skirts  #248  @  $7.25.     Via  B.  C.  Ry.,  380  lb. 

0  35.     Ship  Swanson  Bros.,  Swanville, ,  by  W.  F.  &  Co.  Express, 

C.O.D.,  19  pc.  Brown  Crash,  40,  391^,  38,  41,  38I/2,  391/2,  413^,  40,  41,  38, 
411/2,  391/4,  37,  263^,  38,  3914,  371/2,  38i4,  401/2  yd.  @  93^4  cts. 

0  36.     Ship    Eversole   Mercantile    Co.,    Lincoln,   ,    by   American 

Express,  C.  0.  D. :  2-5/12  doz.  R.  G.  Corsets  #661  @  $10.50;  1/3  doz.  R.  G. 
Corsets  #906  @  $11.50. 

0  37.     Pay  small  items  of  expense  $3.97  in  currency. 

0  38.  Issue  to  G.  B.  Brown  10  shares  of  unsubscribed  stock,  receiving 
cash  at  110.  Credit  Unsubscribed  Stock  at  par  and  open  an  account  with 
Premium  on  Stock  (Ledger  page  5).  Credit  this  account  with  premium 
received. 


PROGRESSIVE  BUSINESS   ACCOUNTING  125 

C39.  Receive  cash,  of  W.  R.  Jolmson  in  payment  of  his  first  bill  less 
the  stipulated  discount.     Allow  him  the  major  fraction  of  a  cent  discount. 

C40.  Receive  a  remittance  from  G.  H.  Brown  &  Son  in  payment  of 
their  first  bill. 

C41.  Receive  a  letter  from  H.  Wester,  Jesup,  complaining  that  one 
item  billed  to  him  was  missing  in  the  "shipment.  On  investigation,  you  find 
his  statement  correct.  Credit  his  account  with  the  proper  amount  at  the 
price  charged,  and  write  him  a  letter  stating  that  you  have  done  so. 

It  will  be  seen  that  Mdse.  should  be  debited  and  H.  Wester  credited 
with  this  return  charge.  But  there  is  an  objection  to  posting  such  an  item 
to  the  debit  of  merchandise.  Mdse.  debits  should  show  cost;  Mdse.  credits 
should  show  sales.  The  above  and  similar  allowances  should  be  deducted 
from  sales  rather  than  added  to  cost.  Do  not  journalize,  but  make  an  entry 
in  the  sales  book  (red  ink)  and  post  the  entry  to  the  credit  of  the  customer. 
Deduct  the  amount  from  the  pencil  footing  of  the  sales  book.  The  effect  of 
this  deduction  is  to  reduce  the  sales  credit  to  the  actual  amount  sold. 

INFORMATION  #  166.  AVhen  quick  communication  is  desired,  it  is 
often  necessary  to  write  a  telegram  instead  of  writing  a  letter.  Telegraph 
companies  convey  messages  immediately  by  wire  and  charge  for  the  service 
a  certain  rate  per  word.  It  is  therefore  desirable  to  use  the  fewest  words 
possible  in  writing  a  telegram,  yet  the  message  should  not  be  so  brief  as  to 
be  obscure  in  meaning.  If  the  purpose  of  the  sender  will  be  served  by  a 
''night  message"  (one  sent  at  the  convenience  of  the  company  after  6  p.  m.) 
a  charge  of  one-half  the  regular  rate  is  made.  If  the  message  is  of  sufficient 
importance,  it  may  be  ordered  "repeated,"  that  is,  sent  back  to  verify  the 
exact  wording.  An  additional  charge  is  made  for  repeating  the  message. 
Telegrams  are  written  on  blank  forms  furnished  by  the  telegraph  company. 
See  form. 

*^'the  wtestern  union  telegraph  COMPAHnr 

Z4,000  OFFICES  IN  AMERICA.  CABLE  SERVICE  TO  ALL  THE  WORLD. 

ROBERT  C.  CLOWRY.  President  and  General  Manager. 


Rucelvar'a  No. 


Time  Filed 


SEND    the  following  message  subject  to  the  term^r^^.^^^^^    >J^-2t--t.u~MJ07Uz^  kT'  \  O^/ /? 
•n  back  hereof,  which  are  hereby  agreed  to.  ~if- ^^ ^iC^.e^Z-C^,    ^<::^^-Z'-t^f-'^,  ^yt^Zy  ^^     |  y/  ^ 


To. 


.^^C^^^x-^L-^^-T^-.^  ^-^- 


£^^ 


(^y.. 


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w-READ   THE    NOTICE   AND    AGREEMENT   ON    BACK.  .Ct 

C  42.     Receive,  by  mail,  an  order  from  G.  H.  Brown  &  Son.    As  you  do 
not  have  the  goods  in  stock,  order  Folwell  Bros.  &  Co.,  Chicago,  by  wire. 


126  PROGRESSIVE  BUSINESS   ACCOUNTING 

to  ship  by  express  the  goods  to  G.  H.  Brown  &  Son,  Brownville,  , 

and  send  bill  for  same  to  you.  Deliver  the  message  to  telegraph  company 
and  pay  the  charges  in  currency  5.0  cts. 

0  43.  Send  a  telegram  (night  message)  to  F.  A.  Foster  &  Co.,  urging 
immediate  shipment  of  the  goods  ordered  in  C23.  Use  ten  words  or  less. 
Pay  charges  30  cts.  in  currency. 

0  44.  Sell  George  Sherrill  20  shares  of  Unsubscribed  Stock  at  110  for 
cash. 

0  45.  Transfer  ten  shares  of  your  stock  in  the  company  to  C.  Bolster, 
receiving  cash  at  110.  Surrender  your  certificate  No.  5,  properly  assigned. 
Issue  two  certificates,  one  to  Bolster  for  ten  shares  and  one  to  yourself  for 
ninety  shares.  Deliver  the  one  to  Bolster  and  collect  cash.  Post  to  stock 
ledger,  debiting  your  stock  account  with  Cert.  #5  returned,  and  crediting 
Bolster's  account  with  No.  11  issued  and  your  account  with  No.  12  issued. 

Take  the  cash  received  to  the  bank  and  purchase  a  draft  for  $500,  and 
exchange  50  cts,  and  take  a  certificate  of  deposit  for  the  remainder.  (See 
Infor.  #167.) 

Inclose  the  draft,  properly  indorsed  (see  Infor.  #98,  form  4)  in  your 
personal  letter  to  The  American  Red  Cross,  Washington,  D.  C,  stating  that 
you  send  the  amount  as  a  personal  donation  to  assist  in  the  relief  of  the 
sufferers  from  the  latest  great  public  calamity  that  you  can  remember. 

Hold  the  certificate  of  deposit. 

INFORMATION  #  167.  A  person  desiring  to  leave  an  amount  of  money 
at  the  bank  to  be  withdrawn  at  one  time,  may  have  a  certificate  of  deposit 
written  in  his  favor  instead  of  depositing  on  open  account.  C.  D.'s  are 
written  payable  on  demand  or  after  a  certain  period,  and  are  called  demand 
or  time  certificates.  When  the  deposit  is  to  be  withdrawn,  the  certificate, 
properly  indorsed,  is  surrendered  to  the  bank. 

0  46.  Sell  the  remainder  of  Unsubscribed  Stock  to  your  teacher,  for 
cash,  at  110. 

0  47.     Deposit  all  cash  on  hand. 

0  48.  Receive  bill  from  Folwell  &  Co.  in  answer  to  your  telegram  in 
C42.     Enter  in  purchase  book  V.  #5. 

Bill  the  goods  shipped  to  G.  H.  Brown  &  Son  by  Folwell  &  Co.  on  your 
account,  to  the  former  firm  at  $2.30  per  yard,  terms  3/10  n/60. 

0  49.  Deduct  the  discount  allowed  on  V.  #5.  Buy  a  bank  draft  for 
net  amount,  exchange  10  cts.  (check  for  $39.30)  ;  enter  on  cash  book  the 
payment  as  instructed  in  C21 ;  carry  the  exchange  to  the  expense  column  on 

the  same  line;  write  on  the  voucher  in  red  ink  "Paid  by  draft 19 — , " 

and  file  the  paid  voucher ;  write  a  letter,  enclose  the  draft,  and  mail  to  Folwell 
Bros.  &  Co. 

0  50.  Balance  the  cash  book.  (1)  Pencil  foot  columns.  (2)  Carry 
Accounts  Receivable,  Accounts  Payable,  and  Expense  special  columns  to 
general  columns  as  in  Ex.  XIX.  (3)  Review  Infor.  #165.  Carry  the  total 
of  Mdse.  Disct.  column  found  on  the  debit  side  of  cash  book  to  the  credit 
general  column  of  cash  book,  thus,  "Mdse.  Disct.  contra  $5.18.  (4)  Carry 
the  Mdse.  Disc,  column  found  on  the  credit  side  of  the  cash  book  to  the 
general  debit  column,  thua,  "Mdse.  Disct.  contra  $2.54.  (5)  Pencil  foot  the 
general  columns,  find  the  cash  balance  and  compare  with  the  bank  balance, 
balance  the  cash  book  and  carry  the  balance  to  page  6. 


PROGRESSIVE  BUSINESS  ACCOUNTING  127 

On  a  sheet  of  journal  paper  take  a  trial  balance.  (Refer  to  closing  of 
journal  Ex.  XIX.  before  completion  of  posting.) 

Below  trial  balance  make  a  list  of  accounts  in  the  stock  ledger  and 
compare  list  with  Capital  Stock  account. 

Below  enter  a  list  of  Installment  Ledger  accounts  (if  any)  and  compare 
with  Subscription.    If  all  accounts  are  closed,  rule  the  Subscription  account. 

Below  make  a  list  of  purchase  ledger  accounts,  if  any,  and  compare  with 
Accounts  Payable  in  general  ledger.  If  all  accounts  are  closed,  rule  the 
latter  account. 

Below  make  a  list  of  sales  ledger  accounts,  and  compare  with  balance  of 
Accounts  Receivable. 

Submit  the  trial  balance  and  lists  for  approval,  and  if  correct,  copy 
on  page  8  of  journal,  cash  and  trial  balances. 

C  51.  Receive  invoice  from  P.  K.  Wilson  &  Son,  in  reply  to  order  sent 
them  in  C23.  Assuming  that  the  goods  received  are  as  billed  in  quantity  and 
quality,  verify  the  extensions  and  footings  of  the  bill  as  usual.  If  errors  have 
been  made,  show  the  right  amount  on  bill  in  red  ink,  and  enter  the  correct 
amount  in  the  purchase  book.  The  sender  of  the  bill  should  be  notified  in 
case  of  error.  Attach  the  corrected  bill,  when  he  sends  one,  to  the  bill  already 
entered. 

0  52.  Receive  invoice  from  Folwell  Bros.  &  Co.,  in  reply  to  order  sent 
them  in  C23.     Assuming  that  the  invoice  checks  with  goods  delivered,  enter. 

C  53.  The  U.  S.  Express  Co.  deliver  the  C.  O.  D.  envelope  sent  with  ship- 
ment in  C32,  containing  cash  for  the  amount  of  the  collection.  Enter  and 
post. 

C  54.  The  American  Express  Co.  return  C.  0.  D.  envelope  sent  with  ship- 
ment in  C36,  containing  cash  collected. 

C  55.  Receive  a  letter  from  H.  Wester,  remitting  draft  in  payment  of 
his  account.     Give  it  the  necessary  attention. 

0  56.     Receive  a  letter  from  G.  H.  Brown  &  Son,  containing  cash. 

C  57.  Pay  by  check  the  premium  on  a  fire  insurance  policy  on  stock  for 
$2,000  at  11/4  cts.    Receive  and  file  the  policy.    Take  receipt  for  the  payment. 

0  58.  Buy  172^/^  shares  of  the  capital  stock  of  the  Barrymore  Dry  Goods 
Co.  at  80.  Pay  by  check  and  receive  the  stock  certificate.  Open  a  ledger 
account  with  Barrymore  D.  G.  Co.  Stock. 

C  59.  You  have  engaged  James  Donner  as  traveling  salesman  at  a  salary 
of  $125  per  month  and  expenses.  Open  an  account  with  him  in  the  general 
ledger  and  write  a  memo  of  the  terms,  at  the  top  of  his  ledger  account. 
Hand  him  a  check  for  $50  advanced  expense  money  and  charge  his  account. 

C  60.    Buy  of  Calhoun,  Robbins  &  Co.,  City,  merchandise  per  bill. 

C  61.  Discount  P.  K.  Wilson  &  Co.  's  invoice  and  send  a  bank  draft 
(exchange  $1)  in  payment. 

0  62.  Discount  Folwell  Bros.  &  Co.'s  invoice  and  send  a  draft  (exchange 
70  cts.)  in  payment. 

0  63.  James  P.  Hess  consents  to  the  payment  of  your  note  running  one 
year  with  interest  for  thirty  days  at  the  rate  named.  He  is  not  legally 
obliged  to  accept  less  than  the  full  year's  interest,  but  for  some  business 
reason  will  settle  on  the  above  terms.  Give  check  for  the  amount  and  receive 
the  canceled  note. 

0  64.  G.  B.  Brown  sells  back  to  the  Company  his  10  shares  of  stock  at 
par.     Give  check.     Charge  Treasury  Stock.     Balance  Brown's  stock  account. 

Observe  that  you  have  overdrawn  your  bank  account.  This  should  not 
be  done  and  will  not  be  allowed  by  the  bank.  It  is  of  no  great  consequence 
in  this  instance,  because  you  have  cash  on  hand  to  cover  the  overdraft  and 


128  PROGRESSIVE  BUSINESS  ACCOUNTING 

should  make  a  deposit  at  once,  so  that  your  balance  will  be  sufficient  to  meet 
the  above  check  when  it  shall  be  presented.  In  the  meantime,  indicate  the 
amount  of  the  overdraft  on  your  check  stub  by  subtracting  your  last  balance 
from  the  amount  of  the  check  and  writing  the  difference  in  red  ink.  Deposit 
all  cash  on  hand  and  show  on  check  stub  your  balance  changed  from  "red" 
to  ''black." 

C  65.  Referring  to  the  sales  book,  it  is  seen  that  L.  E.  Scott  was  charged 
with  a  bill  of  suiting  at  14  cts.  per  yd.  The  price  should  have  been  94  cts. 
per  yd.  Make  in  the  sales  book,  as  you  would  enter  a  new  sale,  the  correct 
entry  referring  to  the  previous  incorrect  entry,  and  fill  out  a  corrected  bill. 
Make  a  red  ink  reverse  entry  in  the  sales  book,  crediting  L.  E.  Scott  with 
the  amount  of  the  previously  entered  incorrect  bill  and  deduct  the  amount 
from  sales  footings  as  directed  in  C41. 

Write  a  letter  explaining  the  change  and  ask  that  the  correct  bill  be 
substituted  for  the  incorrect  one. 

0  66.  Also  find  that  in  the  sale  of  C28  to  Berg  &  Bowers,  186i/>  yd. 
suiting  was  billed  at  14  cts.  instead  of  94  cts.    Proceed  as  in  C65. 

C  67.  Receive  a  letter  from  Runner  &  Stone,  asking  you  to  deduct  the 
discount  of  3  per  cent  from  their  bill  and  draw  at  sight  for  the  proceeds. 
Credit  them  with  the  discount  through  the  journal.  Draw  a  sight  draft  for 
the  net  amount  and  leave  it  at  the  bank  for  collection.  Notify  the  drawees. 
Make  pencil  memo  of  the  draft  drawn  in  credit  side  of  ledger  account. 

C  68.  Receive  a  letter  from  L.  E.  Scott  enclosing  his  60-day  note  without 
interest  to  balance  account.  Credit  through  journal,  enter  in  notes  receivable 
book;  acknowledge. 

C  69.  The  express  C.  0.  D.  on  Swanson  Bros,  in  C35  is  returned  collected. 
Enter  and  post. 

C  70.  The  two  C.  0.  D.  drafts  left  at  the  bank  in  C33  and  C34  are  paid 
and  credited.  '  Have  the  bank  bookkeeper  enter  the  amounts  in  your  pass 
book.  Observe  that  30  cts.  collection  charges  has  been  deducted  from  each 
one.  Enter  collection  charges  in  Mdse.  Disct.  column.  Add  the  credits  to 
your  bank  balance  on  stub  of  check  book. 

C71.  Pay  Calhoun,  Robbins  &  Co.  a  check  of  $300  on  account.  Deduct 
in  red  ink  from  V.  #6.  No  discount  is  allowed  before  settlement  of  entire 
bill.     Enter  and  post. 

0  72.  The  merchandise  ordered  of  F.  A.  Foster  &  Co.,  Broadhead 
Worsted  Mills,  and  Valentine  &  Bentley  has  arrived  and  has  been  checked 
to  their  three  invoices.  It  has  been  found  that  the  invoice  from  Broadhead 
Mills  is  short  one  piece  48yo  yd.  Cashmere.  Deduct  this  from  bill  (red  ink) 
and  notify  the  firm. 

One  bill  is  computed  incorrectly.  Make  the  correction  in  red  ink,  and 
notify  the  firm. 

Enter  the  three  bills  as  corrected  in  the  purchase  book,  giving  them 
voucher  numbers  in  the  order  named  above. 

0  73.  Make  a  list  of  your  liabilities.  Does  the  total  exceed  the  amount 
allowed  by  your  articles  of  incorporation?  If  so,  sell  your  Barryraore  D.  G. 
Co.  stock  to  E.  E.  Clermont  at  82,  receiving  cash.  Assign  the  stock  certificate 
as  before  instructed. 

0  74.  James  Donner  sends  orders  for  immediate  shipment  to  customers, 
which  you  may  enter  and  bill  as  follows: 


PROGRESSIVA]  BUSINESS   ACCOUNTING  129 

Berg  &  Bowers,   Manchester,  ,   terms  3/10  n/60,   via  B.   C.   Ry., 

620  lb.:  10  pc.  Botany  Twill,  52,  51,  51,  521/2,  50,  54,  5314,  ^OVs,  49,  54  yd. 
@  60  cts;  4''pe.  English  Mohair,  36,  381/4,  37,  36I/2  yd.  @  $1.30;  1  pc.  Shark- 
skin, 54  yd.  @  $1.10. 

Mowrey  &  Co.,  Independence,  ,  terms  3/10  n/60,  via  B.  C.  Ry., 

480  lb. :  5  pc.  Jacquarde  Madras,  52,  52i4,  53,  50%,  49  yd.  @  27  cts. ;  2  pc. 
Directoire,  41,  433^  yd.  @  $1.95 ;  3  pc.  Granite  Cloth,  36,  371/2,  35  yd.  @  $1. 

L.  E.  Scott.  Manchester,  ,  terms  3/10  n/60,  via  B.  C.  Ry.,  490  lb. : 

8  pc.  Crown  Lining,  54,  53,  521/2,  56,  55,  53,  493^,  4914  yd.  @  8  cts. ;  10  pc. 
Brown  Sheeting,  42,  43,  4II/2,  43,  44,  451/2,  42,  4314,  45,  44  yd.  @  9  cts. ;  1  pc. 
Storm  Serge,  423^  yd.  @  72  cts. ;  1  pc.  Wool  Taffeta,  60  yd.  @  $1.40. 

Crozier  &  Co.,  Manchester, ,  terms  3%  off  C.  0.  D.,  via  B.  C.  Ry. ; 

sight  draft,  B/L  attached;  210  lb.:  5  pc.  Percale,  44,  451/2,  46,  4314,  47  yd. 
@  13  cts.;  2  pc.  Table  Linen,  56,  56  yd.  @  $1. 

G.  H.  Brown  &  Son,  Brownville, ,  terms  3/10  n/60,  via  B.  C.  Ry., 

715  lb.:  12  pc.  Dimity,  50,  49V^,  483^,  5II/2,  48,  51,  54,  391/2,  541^,  541/2,  52, 
48  yd.  @  11  cts. ;  4  pc.  Nainsook,  30,  31,  3214,  343^  yd.  @  32  cts. ;  2  pc.  English 
Corded  Prunella,  64,  63  yd.  @  $1.90;  3  pc.  Cashmere,  49,  51,  4834  yd.  @  $1.10 

C  75.     Deposit  all  cash  on  hand. 

Compare  balance  shown  by  pencil  footings  of  the  cash  book  with  balance 
shown  on  check  stubs. 

0  76.  Take  $15,000  insurance  for  one  year  in  an  approved  insurance 
company  on  the  stock  at  $12.80  per  thousand;  also  take  $7,000  insurance  in 
another  company  for  one  year  on  the  three-story,  frame,  gravel  roof  building, 
situated  on  the  lot  described  in  the  deed  from  J.  P.  Hess,  paying  $11.30 
per  thousand.     (Charge  Expense.) 

C  77.  The  Byvank  Transfer  Co.  renders  a  bill  of  in-freight  and  transfer 
charges  on  merchandise  received  and  delivered  by  them  to  date  amounting 
to  $382.90.  Pay  by  check.  Use  Explanation  in  ledger  account  "Freight  and 
Drayage,"  when  you  post  to  the  debit  of  Mdse.  account. 

C78.  Deduct  2%  discount  from  the  last  bill  from  Calhoun,  Robbins  & 
Co.,  and  pay  the  balance  due  by  check. 

0  79.  Deduct  the  discount  allowed  by  Valentine  &  Bently;  buy  a  draft 
for  the  net  amount;  add  to  the  check  with  which  draft  is  purchased  $6.50 
exchange ;  remit  as  usual. 

0  80.  The  sight  draft  drawn  on  Runner  &  Stone  in  C67  has  been  paid 
and  the  proceeds,  after  deduction  of  15  cts.  exchange,  has  been  placed  to 
your  credit  by  the  bank.     Have  entry  made  in  your  pass  book. 

0  81.  Receive  a  letter  from  the  Broadhead  Worsted  Mills.  Accept  their 
offer  and  send  note  as  requested. 

0  82.  Ship  back  to  F.  A.  Foster  &  Co.  the  entire  quantity  of  Dotted 
Swiss  goods  billed  you  recently.  On  reviewing  the  correspondence,  it  is 
found  that  this  was  not  ordered.  Charge  their  account  by  making  a  reverse 
entry  in  the  purchase  book  (red  ink)  and  deduct  the  amount  from  the  pur- 
chase footings. 

0  83.  Receive  a  letter  from  Berg  &  Bowers  enclosing  draft  $830.54  in 
payment  of  two  bills. 

0  84.     James  Donner  sends  orders  which  fill  as  follows : 

H.  Wester.  Jesup — terms  10  days  net,  5  pc.  Botany  Twill,  51,  53,  51, 


130  PROGRESSIVE   BUSINESS   ACCOUNTING 

521/2,  531^  yd.  @  60c;  2  pc.  English  Mohair,  37,  361/4  yd.  @  $1.30;  1  pc. 
Granite  Cloth,  371/2  yd.  @  $1.00 ;  150  lb.    Via  I.  C.  Ry. 

Eunner  &  Stone,  La  Porte, ,  terms  2/10  n/30,  12  pc.  Crown  Lining. 

53,  521/2,  53,  511/2,  52,  491/2,  483^,  5II/2,  521/2,  53,  54,  53  yd.  @  8c ;  2  pc.  Eng. 
Corded  Prunella,  631/2,  641/2  yd.  @  $1.90.    Via  B.  C.  Ry.    200  lb. 

Sell  W.  R.  Johnson,  City,  Acct.  10  days:  6  pc.  Dimity,  48%,  391/2,  46, 
48,  4914,  54  yd.  @  lie ;  10  pc.  Jaquarde  Madras,  51,  52,  5214,  51,  49y2,  491/2, 
50,  51,  51%,  51  yd.  @  27c. 

C  85.  The  sight  draft  on  Crozier  &  Co.  has  been  collected  and  credited 
to  your  account  at  the  bank  at  face  less  30  cts.  Have  it  entered  in  your 
bank  book. 

0  86.  Make  a  statement  showing  "W.  R.  Johnson's  balance,  without  dis- 
count; fill  out  30-day,  interest-bearing  note  for  the  balance,  secure  his  signa- 
ture and  close  the  account. 

G  87.  Receive  expense  report  from  James  Donner  showing  total  travel- 
ing expenses  paid  by  him  for  the  week  to  $28.39.  Make  journal  entry 
debiting  Expense  and  crediting  James  Donner.  (A  separate  account  title 
"Traveling  Expense"  is  used  where  it  is  desired  to  keep  this  item  separate 
from  General  Expense.) 

0  88.  Send  F.  A.  Foster  &  Co.  a  draft  for  $1,000  (Exchange  $1),  to 
apply  on  account. 

0  89.  Receive  a  letter  from  H.  Wester  enclosing  note  in  settlement  of 
account.     Give  him  credit  and  acknowledge  remittance. 

0  90.  James  Donner  informs  you  by  telephone  from  Manchester  that 
owing  to  personal  reasons  he  is  unable  to  represent  the  house  any  longer. 
He  reports  that  his  expense  account  since  last  report  shows  $7.84  expended, 
for  which  he  asks  credit,  together  with  one-half  month's  salary.  Allow  him 
the  credit  asked  and  remit  to  him  a  bank  draft  for  the  balance  due  him. 
(Exchange  10  cts.) 

INFORMATION  #  168.  When  property  losses  by  fire  occur,  the  agents 
of  the  companies  who  carry  the  insurance  of  the  property  should  be  notified 
immediately.  The  agents  inspect  the  loss  and  report  to  their  companies. 
If  losses  are  partial  or  small,  the  local  agents  are  usually  required  to  make 
an  agreement  with  the  assured  as  to  the  amount  of  loss,  and  to  award  the 
damages.  If  the  loss  is  considerable,  special  insurance  adjusters  are  sent 
from  the  main  offices.  It  is  often  difficult  to  determine  the  exact  amount 
of  loss.  There  is  no  set  simple  rule  for  doing  this.  If  the  merchandise 
account  is  kept  as  in  this  set,  showing  on  the  debit  side  the  actual  cost  plus 
the  freight,  and  on  the  credit  side  the  actual  sales,  the  losses  on  merchandise 
can  be  approximated  closely  enough  in  case  of  total  loss  for  practical  pur- 
poses by  an  inspection  of  this  account,  with  the  accompanying  vouchers. 

When  it  is  impossible  to  agree  as  to  the  value  of  a  loss,  insurance  com- 
panies frequently  restore  damaged  buildings  rather  than  pay  to  the  assured 
a  cash  loss. 

When  an  agreement  with  reference  to  a  loss  is  made,  the  assured  is 
required  to  sign  the  "proof  of  loss,"  which  serves  as  a  release  from  further 
claims  by  him. 

0  91.  A  fire  which  occurred  in  the  store  room  some  time  ago,  damaging 
a  small  quantity  of  merchandise,  has  been  adjusted  with  the  agent  of  the 
fire  insurance  company,  the  loss  agreed  upon  being  $52.     Sign  the  agent's 


PROGRESSIVE   BUSINESS   ACCOUNTING  131 

proof  of  loss  form  and  receive  cheek  for  the  amount  of  the  claim,  which 
credit  to  Merchandise  account. 

C  92.  "Walter  A.  Garrabrant  has  sold  his  20  shares  of  stock  to  Leo  A. 
Boyce.     Make  a  correct  transfer  on  the  books.     (Compare  with  C26.) 

C  93.  Examine  your  ledger  to  see  that  the  indebtedness  does  not  exceed 
the  limit  mentioned  in  the  articles  of  incorporation. 

C  94.     Deposit  all  cash  on  hand. 

Pay  the  secretary  and  treasurer  one  month's  salary  by  check. 

C  95.  Enter  resource  Inventories  of  Merchandise,  Real  Estate,  Furniture 
&  Fixtures,  and  liability  inventory  of  Interest  and  Discount  on  pages  11  and 
12  Inventory  book. 

Merchandise  as  listed  below : 

20  pc.  Brown  Crash,  800  yd.  @  8c;  6  pc.  Suiting,  IGTi/s  yd.  @  27c; 
31  pc,  "Wash  Goods,  1,026%  yd.  @  5%c;  6  pc.  Jamestown  Suitings,  152  yd.  (a) 
72y2C;  lOVo  doz.  Hose  #503  @  $2.10  per  doz. ;  3-5/12  doz.  R.  G.  Corsets 
#663  @  $8.50  per  doz.;  1  Emp.  Skirt  #417  @  $9;  308  doz.  J.  &  P.  Coats 
Thread  @  55c  per  doz.;  120  P.  Cases  42x36  @  l%c;  60  P.  Cases  42x36 
"Fearless"  @  834c;  12  P.  Cases  "Clio"  @  n%c;  60  P.  Cases  45x36  "Gold 
Medal"  (a)  15i/oc;  36  pc.  Vienna  Silkaline,  l,868i/2y<l-  (a)  7y2C;  7  pc.  V.  Silka- 
line,  34514  yd.  @  6c ;  7  pc.  French  Muslin,  400  yd.  @  8%c;  2  pc.  Cypress 
Denim,  1213^  yd.  @  91/20;  3  pc.  Hungarian  Cloth,  1233^  yd.  @  15c;  3  pc. 
Fig.  Dimity,  1583^  yd.  @  121/00;  2  pc.  Zephyr  French  Taffeta,  117  yd.  @ 
I2I/2C;  2  pc.  Dundee  Burlap,  81  yd.  @  9c;  2  pc.  Ragaline  Crepe,  491/2  yd. 
@  15c;  3  doz.  Gowns  @  $9  per  doz.;  1/3  doz.  Gowns  @  $21  per  doz.;  1/12 
doz.  Gowns  @  $54  per  doz. ;  5  pc.  Unbleached  Muslin,  168  yd.  @  6c ;  20  pc. 
French  Serge  Raye,  721  yd.  @  80e ;  2  pc.  "Wool  Taffeta,  120  yd.  @  $1.10; 
25  pc.  Percale,  1.132  yd.  @  9c ;  80  pc.  Crown  Lining.  4,330  yd.  @  6c;  60  pc. 
Br.  Sheeting,  3,582  yd.  @  7c;  13  pc.  Dimity,  6631/2  yd.  @  8c;  85  pc.  Botany 
Twill,  4,4811/2  yd.  (S)  45c;  100  pc.  Toweling,  5,020  yd.  @  9c;  49  pc.  Storm 
Serge,  2,401  yd.  @'55c;  20  pc.  Broadcloth,  958  yd.  @  $2.80;  16  pc.  Granite 
Cloth,  546  yd.  @  75c:  17  pc.  Cashmere.  82414  yd.  @  90c;  44  pc.  Eng.  Mohair, 
1,656  yd.  (5)  $1.05;  35  pc.  Jacquarde  Madras,  1,84834  yd.  @  18c;  46  pc.  Eng. 
Corded  Prunella,  1,049  yd.  @  $1.50;  18  pc.  Directoire,  734  yd.  (n)  $1.60;  19  pc. 
Sharkskin,  1,036  yd.  @  90c;  26  pc.  Nainsook,  9633^  yd.  @  24c;  30  pc.  Dundee 
Twill,  1,429  yd.  @  32c;  12  pc.  Jamestown  Suitings,  528  yd.  (a)  $1.20;  10  pc. 
Broadcloth,  383  yd.  @  $2.10;  10  pc.  French  Muslin,  437  yd.  @  6c. 

Real  Estate,  $14,500. 

Furn.  &  Fixt.  10%  below  cost. 

Interest  &  Discount,  a  liability  inventory  of  6%  for  30  days  on  the  three 
notes  payable  to  J.  P.  Hess. 

C  96.     Rule  up  Journal,  purchase  and  sales  books  and  post. 

C  97.  Balance  the  cash  book  and  make  a  trial  balance  and  ledger  lists 
as  in  C50      Record  same  on  page  9. 

0  98.  Make  a  statement  of  the  business  and  record  on  page  10.  In  this 
statement  include  the  capital  stock  with  liabilities  and  the  treasury  stock 
with  resources. 

Close  the  ledger  into  Loss  &  Gain. 

C  99.  At  a  meeting  of  the  board  of  directors  it  is  decided  to  declare 
a  dividend  of  five  per  cent  on  the  240  shares  of  stock  held  by  stockholders. 

Close  Loss  &  Gain  into  Undivided  Profits. 


132  PROGRESSIVE  BUSINESS   ACCOUNTING 

Close  5%  of  $24,000  into  Dividend  #1  account  and  the  remainder  of 
the  gain  into  Surplus.  Issue  checks  to  each  stockholder  for  his  five  per  cent 
dividend,  and  post  to  Dividend  account  and  rule. 

Write  on  check  "Five  per  cent  Dividend  #1  declared  ..19..." 

C  100.  Balance  the  cash  book  and  take  a  trial  balance,  making  record 
on  page  10, 

Submit  your  work. 

QUESTIONS.     1.     What  is  the  secretary's  minute  book  and  how  used? 

2.  What  special  ledgers  are  used  in  this  set? 

3.  What  special  columns  appear  in  the  journal? 

4.  What  special  columns  appear  in  the  cash  book? 

5.  Explain  the  use  of  contra  discount  columns  in  the  cash  book. 

6.  What  is  a  real  estate  mortgage? 

7.  What  is  a  bill  of  lading  and  how  used? 

8.  How  are  shares  of  stock  transferred  on  the  books  of  the  company? 

9.  How  are  goods  billed  C.  0.  D.  by  freight? 

10.  How  are  goods  billed  C.  O.  D.  by  express? 

11.  Why  should  not  returned  merchandise   be   charged   to   the   general 
merchandise  account? 

12.  What  is  a  certificate  of  deposit  and  how  used? 
13.     How  is  a  bank  overdraft  shown  on  check  stub? 

14.  How  are  fire  losses  adjusted  by  insurance  companies? 

15.  How  is  an  account  with  a  traveling  salesman  kept? 

16.  What  can  you  say  of  the  entry  for  a  liability  inventory  when  closing 
the  books? 

17.  How  is  a  corporation  statement  of  business  made,  and  how  does  it 
differ  from  an  ordinary  statement? 

18.  What  does  surplus  account  represent? 

19.  Name  some  advantages  of  a  corporation. 

20.  Name  three  usual  officers  of  a  corporation. 

EXERCISE  XXI 

INFORMATION  #  170.  A  method  of  bookkeeping  in  which  accounts 
with  persons  and  cash  only  are  kept  is  called  single  entry.  This  name  is 
used  to  indicate  that  in  any  transaction  a  corresponding  debit  is  not  sought 
for  every  credit,  but  that  the  debit  or  credit  that  seems  of  most  use  to  the 
bookkeeper  is  entered,  while  the  corresponding  entry  is  disregarded.  Any 
accounts  kept  in  double  entry  can  be  kept  in  single  entry  books,  but  as  a 
rule  those  who  keep  books  by  single  entry  give  attention  to  the  financial 
accounts  only. 

INFORMATION  #  171.  In  single  entry  a  day  book  is  used  to  record 
personal  debits  and  credits  or  other  memoranda,  and  a  cash  book  in  which 
to  record  cash  receipts  and  payments. 

Entries  in  either  of  these  books  so  far  as  they  affect  personal  accounts 
are  posted  to  such  accounts  in  a  personal  account  ledger. 

INFORMATION  #172.  There  are  many  devices  used  for  simplifying 
sales  records  from  shops  to  retail  customers;  as,  the  duplicate  sales  sheets, 
customers'  individual  pads,  combined  sales  and  ledger,  etc.  These  devices 
are  useful,  as  they  reduce  the  labor  of  billing  and  posting  small  sales,  but 


PROGRESSIVE  BUSINESS   ACCOUNTING 


133 


they  require  no  special  study  here  as  their  form  is  constantly  undergoing 
change,  and  their  usefulness  is  more  or  less  evident  without  any  special 
reference  in  a  study  of  accounting. 

EXPLANATION.  In  this  exercise  the  entries  illustrating  the  use  of 
single  entry  books,  the  posting,  and  method  of  taking  a  financial  statement 
are  given. 

DIRECTIONS.  Take  one  folded  sheet  of  journal  and  one-half  sheet 
ledger  paper.  Use  pages  1  and  2  of  the  journal  paper  for  a  day  book,  page 
3  for  a  cash  book  and  page  4  for  statement.  The  ledger  is  to  contain  per- 
sonal accounts  only ;  three  payable  on  page  one,  five  receivable  on  page  two. 


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TRANSACTIONS.  Nov.  1,  1910.  John  Adams  began  a  retail  hardware 
business  with  the  following  investment :  Cash  $580.20,  Merchandise  valued 
at  $4,629.50.  Real  Estate  valued  at  $2,750.    There  are  no  liabilities. 

Make  a  list  of  the  resources  as  shown  in  the  model  day  book.  No  account 
is  to  be  kept  with  merchandise  or  real  estate.  Simply  transfer  the  cash  to 
the  debit  column  of  the  single  page  cash  book.  Place  a  check  mark  before 
the  entry  to  show  that  no  posting  is  required. 

Paid  cash  for  taxes  on  property  occupied  for  business,  $29.63.  Enter  as 
in  model  and  check  mark  to  show  no  posting. 

Nov.  2.  Bought  of  Garver  &  Lane,  merchandise  per  bill  V.  #2.,  $259.84, 
on  account. 

Enter  in  day  book  as  in  model  and  post  to  personal  ledger  in  the  accounts 
payable  portion. 

Nov.  3.  Bought  of  Coan  &  Co.,  on  account,  merchandise  per  V.  #3, 
$164.30.    Enter  and  post  as  before. 

Paid  sundry*  expense  items  $3.29.     Enter  in  cash  book.    Do  not  post. 

Paid  freight  on  Vouchers  #2  and  3,  $16.34. 


134 


PROGRESSIVE  BUSINESS   ACCOUNTING 


Nov.  4.     Sold  to  E.  S.  Conry,    on    account,    1    Kitchen  Range,  $34.60; 
1  Boiler,  $1.80 ;  5  pc.  Pipe  for  $1.30. 


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Enter  in  day  book  as  in  model  and  post  to  debit  of  customer  as  in  model. 

Sold  W.  B.  Cooper,  on  account,  1  Hand  Saw,  $2.25;  1  Plane,  $1.20;  1 
Square,  $1.50. 

Sold  for  cash  to  sundry  customers:  Dish  pan,  80  cts;  1  #10  shears, 
60  cts;  2  hammers  for  $1.10;  1  axe  4#  for  $1.25.  (Enter  in  cash  book.  Do 
not  post.) 

Nov.  8.  Paid  Garver  &  Lane  cash  on  account,  $100.  (Enter  in  cash 
book,  using  the  title  Garver  &  Lane.  As  this  is  a  personal  account,  post  the 
entry  to  the  debit  of  G.  &  L. 's  account.) 

Nov.  9.     Bought  of  Plibbard  &  Co.,  mdse.  per  V.   #4,  $729.50. 

Sold  Mrs.  M.  B.  Williams,  on  account,  1  enameled  roaster,  $1.50;  1  soup 
strainer,  25  cts ;  1  universal  bread  mixer,  $2 ;  4  papers  tacks,  20  cts ;  1  rolling 
pin,  15  cts. 

Nov.  9.  Sent  Hibbard  &  Co.  a  30-day  note  #1,  on  account,  for  $500. 
(Debit  H.  &  C.  in  day  book  and  post  to  ledger.  The  notes,  if  numerous 
enough,  could  be  entered  in  a  notes  payable  book.  Otherwise  they  would  be 
referred  to  from  stub  of  note  book.) 

Nov.  10,  The  following  cash  sales  were  made:  Meat  grinder,  $1.25; 
awl,  40  cts ;  steel  carving  knife,  50  cts ;  cold  chisel,  90  cts ;  flour  sifter,  50  cts ; 
refrigerator,  $16.80;  set  irons,  $2. 

Nov.  12.  Received  of  E.  S.  Conry  a  note  at  30  days  in  settlement  of  his 
account,  $37.70.  (Credit  Conry  through  the  day  book.  An  entry  of  notes 
receivable  is  kept  in  auxiliary  notes  receivable  book  if  there  are  a  sufficient 
number  to  require  such  a  record.) 

Nov.  15.  Paid  cash  for  sundry  expense  items,  $16.  Received  of  "VV.  B. 
Cooper,  cash  in  full  of  account,  $4.95.     (Enter  in  cash  book  and  post.) 

Nov.  16.  Sold  Charles  Gates,  on  account,  1  emery  stone,  $5;  100  ft. 
soft  mesh  fencing,  $3;  #2  mortise  lock  for  70  cts. 

Nov.  17.  Sold  M.  B.  Doren,  on  account,  stepladder,  $1.75;  1  gasoline 
can,  65  cts;  1  ironing  board,  98  cts;  1  bread  board,  47  cts. 

Sold  E.  S.  Conry,  on  account,  1  register,  $3;  40  ft.  8  in.  pipe,  $4;  1  pkg. 
wire,  10  cts. 

Paid  Charles  Emery,  wages  as  clerk,  $7. 


PROGRESSIVE   BUSINESS   ACCOUNTING  135 

Nov.  18.  Sold  W,  B.  Cooper,  on  account,  1  pr.  shears,  40  cts ;  1  dust  pan, 
25  cts ;  1  #9  file,  75  cts ;  1  dbl.  tin  pail,  60  cts ;  1  cake  tin,  27  cts ;  1  stove 
mat,  $1.25. 

Sold  Mrs.  M.  B.  Williams,  on  account,  1  hard  coal  burner,  $40;  1  blue 
flame  oil  stove,  $21 ;  1  pail,  40  cts. 

Received  cash  of  Mrs.  M.  B.  Williams,  on  account.  $15. 

Nov.  19.     Sent  Doan  &  Co.  our  note  #2  in  full  of  account. 

Nov.  20.     Sent  Garver  &  Lane  cash,  on  account,  $100. 

Nov.  21.  Received  from  Doan  &  Co.  invoice  of  goods  billed  on  account, 
V.  #5,  $349.80. 

Nov.  30.  Mrs.  M.  B.  Williams  gives  her  60-day  note  for  the  balance  of 
her  account. 

The  student  will  observe  that  the  entries  of  debits  and  credits  in  the  same 
column  of  the  day  book,  and  of  posted  and  unposted  items  in  the  same  column 
of  cash  book  renders  any  proof  of  posting  by  comparison  with  column  foot- 
ings practically  impossible.  The  bookkeeper,  if  he  keeps  books  in  this 
manner,  simply  must  be  careful  to  post  correctly.  A  failure  to  post  may 
never  be  discovered. 

In  closing  the  cash  book,  place  the  balance  in  the  lesser  side  (red  ink), 
rule,  foot,  and  carry  the  balance  down  (black  ink). 

A  statement  of  the  business  may  now  be  taken  from  the  cash  balance 
and  the  following  resources:  Merchandise  inventory,  $6,062.93;  Notes  Re- 
ceivable inventory,  $88.20;  Real  Estate  inventory,  $2,750;  and  list  of  open 
accounts  receivable.  The  liabilities  are  Notes  Payable  inventory,  $664.30. 
and  list  of  open  accounts  payable. 

The  diflFerence  between  total  resources  and  liabilities  will  show  net 
worth.  The  net  worth  compared  with  net  worth  at  starting  will  show  loss 
or  gain  for  the  period. 

After  completion,  pin  the  exercise,  dky  book  at  top,  ledger  under,  and 
submit. 

QUESTIONS.     1.     What  is  single  entry  bookkeeping? 

2.  What  kind  of  accounts  are  generally  kept  in  single  entry  books? 

3.  Can  any  account  kept  in  double  entry  books  be  kept  by  single  entry 
if  desired? 

4.  What  three  books  are  essential  in  single  entry? 

5.  How  is  the  day  book  used? 

6.  Describe  the  cash  book  there  illustrated. 

7.  What  two  divisions  of  ledger  accounts  were  made? 

8.  What  division  of  accounts  found  in  double  entry  books  was  omitted? 

9.  How  is  the  financial  statement  taken  from  single  entry  books? 
10.     How  is  gain  or  loss  for  a  given  period  shown? 

EXERCISE  XXII. 

INFORMATION  #  173.  The  six-column  journal,  as  commonly  used,  is 
a  book  with  four  special  columns  and  two  general  columns,  so  arranged  that 
the  titles  and  explanations  appear  in  the  center  space  from  left  to  right ;  the 
debit  money  columns  are  placed  to  the  left,  and  the  credit  money  columns 
to  the  right  of  this  space.  A  debit  and  a  credit  cash  column  are  used,  thus 
doing  away  with  the  general  cash  book.     This  form  of  journal  is  practical, 


136 


PROGRESSIVE   BUSINESS    ACCOUNTING 


and  in  many  places  can  be  used  to  good  advantage.     The  form  illustrated 
shows   Cash,   Mdse.   and  General   debit  columns;   General,   Mdse.   and   Cash 


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#  174.  The  six-column  and  the  four-column  journals  and  the  special 
column  cash  books  given  in  this  text  illustrate  the  uses  to  which  special 
columns  may  be  placed.  Bookkeepers  employ  special  columns  very  largely 
where  work,  particularly  posting,  can  be  reduced  by  their  use.  Journals  con- 
taining ten,  twelve  and  even  twenty  columns  are  not  unusual.  Special  journal 
columns  should  be  discontinued  at  the  point  where  the  entry  of  an  amount 
in  a  given  column  at  a  distance  from  its  title  would  involve  more  care  than 
would  the  posting  of  the  entry  to  the  ledger  from  a  book  of  ordinary  columns. 

EXPLANATION.  In  this  exercise  we  have  chosen  the  lumber  business 
to  illustrate  the  essential  entries,  although  it  might  be  used  as  well  with 
many  other  lines. 

DIRECTIONS.  Take  one-half  sheet  of  six-column  journal  and  one-half 
sheet  of  ledger.  Allow  page  one  of  ledger  for  general  accounts  and  page 
two  for  personal  accounts.     Accounts  will  need  five  lines  each. 

TRANSACTIONS.  Dec.  1.  Frank  C.  Bowers  began  a  lumber  business, 
investing  cash  $5,290.60,  and  Mdse.  per  inventory,  $14,296.80.     Enter,  and 


PROGRESSIVE   BUSINESS   ACCOUNTING  137 

post  one  item.  (Observe  that  in  the  model  entry  the  Cash  and  Mdse.  debits 
are  carried  to  their  respective  columns  to  be  posted  by  totals  when  the 
journal  is  balanced.  The  credit  is  carried  to  the  general  credit  column,  indi- 
cating that  it  is  to  be  posted  as  entered. 

Dec.  2.  Bought  for  cash,  Mdse.  per  V.  #1,  $1,529.60.  •  (No  posting  is 
required,  as  both  debits  and  credits  are  in  special  columns.) 

Bought  of  Brown  &  Son,  on  account,  Mdse.  per  V.  #2,  $627.80.  (Post 
the  credit  from  general  column.) 

Bought  of  Cadman  &  Co.  Mdse.  per  V.  #3,  $1,742.61,  giving  note  payable 
:^1  in  payment. 

Dec.  3.  Sold  for  cash  Mdse.  per  sales  book,  amounting  to  $694.72.  (No 
posting  required.) 

Sold  to  T.  Everson,  Mdse.  per  sales  book,  on  account,  $1,620.70.  (Post 
one  title.) 

Sold  to  E.  B.  Jamison,  receiving  in  payment  his  note  at  60  days,  Mdse. 
per  sales  book,  $549.59. 

Dec.  4.     Paid  cash  for  stationery  for  office,  $30.26. 

Received  cash  of  T.  Everson,  on  account,  $500. 

Pencil  foot  the  cash  debit  and  credit  columns.  Is  the  balance  there 
shown  $4,925.46? 

Dec.  10      Sold  for  cash  to  J.  Kellogg,  Mdse.  per  sales  book,  $560.50. 

Dec.  11.  Sold  to  Archer  &  Archer,  on  account,  Mdse.  per  sales  book, 
$40.64. 

Dec.  12.     Sent  Brown  &  Son  our  60-day  note  to  apply  on  account,  for  $400. 

Received  from  E.  B.  Jamison,  cash  indorsed  on  the  note  received  from 
him  Dec.  3,  $120. 

Paid  Cadman  &  Co.  cash  indorsed  on  the  note  given  Dec.  1,  $1,000. 

Bought  of  Ely  &  Close,  Mdse.  per  V.  #4,  on  account,  $2,168.30. 

Dec.  15.     The  day's  cash  sales  per  sales  book  amount  to  $124.95. 

Received  cash  of  Archer  &  Archer  in  full  of  account. 

Dec.  31.     Paid  Ely  &  Close  cash  on  account,  $1,000. 

After  entry  of  above  transactions,  close  the  month's  work  on  the  journal 
by  carrying  the  footings  of  the  special  columns  into  the  general  columns. 
The  footing  of  the  general  columns  should  then  balance.  Post  the  entries  in 
the  general  columns  and  refer  back  to  the  other  entries  in  the  general  col- 
umns to  see  that  all  are  posted.    A  cash  account  is  needed  in  the  ledger. 

Take  a  trial  balance  of  ledger. 

Submit  the  work. 

QUESTIONS.     1.     Describe  the  six-column  journal. 

2.  What  advantages  has  this  book? 

3.  Is  a  general  cash  book  required  with  a  six-column  journal? 

4.  Why  are  the  cash  totals  posted  to  the  ledger? 

5.  What  can  you  say  with  reference  to  special  column  journals  con- 
taining many  columns? 

EXERCISE  XXIII 

INFORMATION  #175.  In  the  management  of  a  business  concern  em- 
ploying many  persons,  the  work  can  be  taken  care  of  best  by  dividing  it 
into  departments.     Each  department  is  in  charge  of  a  manager  whose  entire 


138 


PROGRESSIVE  BUSINESS   ACCOUNTING 


attention  is  given  to  a  particular  phase  of  the  business.  The  bookkeeping 
records  of  the  departments  are  kept  as  separate  units,  but  the  totals  are 
reported  each  day  to  a  general  bookkeeper  who,  from  these  reports,  makes 
ap  the  general  accounts  of  the  business.  The  department  plan  of  conducting 
any  business  enables  the  persons  working  to  specialize  on  one  given  part 
of  the  whole  work  and  thus  accomplish  greater  results  than  could  be  secured 
if  each  person's  energies  were  expended  in  many  different  ways. 

EXPLANATION.  In  this  exercise,  the  department  system  of  bookkeep- 
ing will  be  illustrated  by  the  entries  of  two  days'  work  in  a  bank.  The 
rulings  required  are  to  be  prepared  by  the  student  from  writing  paper.  The 
student  should  use  care  as  to  width  of  rulings  and  general  make-up. 

INFORMATION  #  176.  (Review  Infor.  #81,  #82,  #144,  and  #145.) 
A  bank  may  be  divided  into  four  departments:  (1)  Department  of  Individual 
Deposits,  where  the  daily  deposits  of  customers  are  credited  and  their  daily 
checks  are  charged;  (2)  Department  of  Loans  and  Discounts,  where  entries 
are  made  of  the  notes  on  which  customers  have  borrowed  money,  and  of  the 
payment  of  such  notes;  (3)  Exchange  Department,  where  a  record  is  made 
of  the  drafts  drawn  by  the  local  bank  on  other  banks  and  of  drafts  sent  by 
the  local  bank  to  other  banks  for  collection  or  credit;  (4)  General  Books, 
where  a  record  is  kept  of  the  totals  passed  from  the  other  departments  by 
tickets  daily.  Of  course,  other  departments  are  needed  in  banks  whose  busi- 
ness is  more  extensive  and  varied  than  here  considered.  The  forms  given, 
however,  are  representative. 

#  177.  The  entries  for  the  individual  deposits  are  placed  daily  in  a 
ledger  especially  ruled  for  this  purpose.  Several  different  rulings  are  in 
use.  A  common  one  is  here  given.  In  this  ledger  the  depositor's  name  is 
placed  at  the  left.  To  the  right  of  the  name,  divisions  are  made,  each  division 
to  contain  one  day's  work.  The  day's  work  shows  on  each  depositor's  line 
in  one  column  the  total  checks  charged,  in  another  the  credits  given,  and  in 
a  third  the  balance  of  the  account.  The  totals  of  all  checks  or  debits  and 
of  all  deposits  for  the  day  are  found  by  footing  the  respective  columns. 
At  the  close  of  the  day,  these  footings  are  passed  by  ticket  to  the  general 
bookkeeper,  who  enters  the  amounts  to  the  debit  and  credit  of  Individual 
Deposits  account  in  the  general  books.     See  model. 


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Sr 


PROGRESSIVE   BUSINESS   ACCOUNTING 


139 


#  178.  Money  is  loaned  by  tlie  bank  to  persons  who  give  the  bank 
their  notes  to  secure  payment.  The  advance  of  money  by  the  bank  is  called 
a  Loan  when  the  face  of  an  interest-bearing  note  is  paid  to  the  borrower  to 
be  repaid  with  accrued  interest  later.  It  is  called  a  Bill  Discounted  when 
future  due  paper  is  taken  by  the  bank  at  a  deduction  from  the  amount, 
and  the  proceeds  or  difference  between  face  and  discount  is  paid  to  the  cus- 
tomer. The  entries  of  the  loans  and  discounts  for  the  day  are  made  in  the 
loan  and  discount  register,  as  shown  in  the  model.  The  totals  are  handed  to 
the  general  bookkeeper  by  tickets  debiting  Loans,  and  Bills  Discounted,  and 
crediting  Discount.     See  form. 


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#  179.  In  the  Exchange  Department,  drafts  on  other  banks  with  whom 
the  drawing  bank  has  open  accounts,  are  drawn  and  sold  to  customers  who 
wish  to  make  remittances.  Entry  of  these  drafts  is  made  in  the  draft  regis- 
ter, which  contains,  besides  a  column  for  the  totals  drawn,  a  column  for  the 
total  exchange  charged  for  them.  Tickets  are  given  the  general  bookkeeper 
crediting  the  drawee  bank  and  Exchange  accounts.     (See  model.) 


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In  this  department  drafts  and  other  cash  items  payable  by  out-of-town 
banks  are  entered  in  a  remittance  register.  After  entry,  they  are  indorsed 
and  mailed  to  a  correspondent  bank  which  is  to  pay  or  send  them  for  col- 
lection to  other  banks.  This  correspondent  bank  gives  credit  for  these  drafts, 
thus  maintaining  a  credit  balance  against  which  the  above  mentioned  drafts 
are  drawn.  The  day's  drafts  issued  are  totaled  on  remittance  register,  and 
the  total  credited  to  the  bank  on  which  drawn.  The  total  exchange  is  cred- 
ited to  Exchange  account.  The  total  of  the  remittance  register  is  charged  to 
the  account  of  the  bank  to  whom  sent. 


140 


PROGRESSIVE  BUSINESS  ACCOUNTING 


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dj:  180.  The  tickets  from  the  departments  are  entered  in  the  general 
journal  to  the  debit  or  credit  of  the  accounts  mentioned.  This  is  conveni- 
ently done  in  a  journal  with  the  titles  in  the  center  and  the  debit  and  credit 
amounts  in  columns  to  the  left  and  right.     The  usual  titles  are 

Bills  Discounted — The  account  with  discounted  notes,  drafts,  etc.,  pur- 
chased by  the  bank. 

Cash — Practically  all  transactions  of  a  bank  are  for  cash,  hence  cash 
is  the  complementary  title  of  every  debit  or  credit  ticket  entry. 

Other  Banks — The  banks  on  whom  drafts  are  drawn  and  to  whom  cash 
items  are  sent. 

Expense — As  in  any  other  business. 

Furniture  and  Fixtures — As  in  any  other  business. 

Loans — The  account  with  customers'  interest-bearing  notes  representing 
cash  paid  for  loans. 

Capital  Stock — As  in  any  other  business. 

Certificates  of  Deposit — The  account  with  deposited  money  for  which 
certificates  of  deposit  have  been  given. 

Collection  and  Exchange — To  which  is  credited  the  charges  for  collecting 
paper  and  the  exchange  for  drafts  sold. 

Interest  and  Discount — The  cash  paid  for  the  use  of  money  on  loans 
or  discounts. 

Individual  Deposits — The  total  of  accounts  with  checking  depositors. 

The  above  are  the  principal  general  ledger  titles  in  a  bank,  although 
other  titles  are  used  with  more  or  less  frequency. 


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PROGRESSIVE   BUSINESS   ACCOUNTING 


141 


The  general  journal  is  posted  to  the  general  ledger  daily.  The  general 
ledger  may  be  ruled  in  one  of  several  different  ways,  as  the  four-column 
balance  ledger,  the  three-column  balance  ledger,  the  ordinary  two-column 
ledger,  etc.     In  this  exercise  the  two-column  ledger  is  to  be  used. 

A  daily  balance  of  the  ledger  is  taken  in  the  daily  balance  book.  This 
is  so  arranged  that  the  accounts  showing  resources  and  those  showing  liabil- 
ities are  grouped  separately.  The  total  resources  thus  equal  the  total  lia- 
bilities. See  the  model  form  which  shows  the  resource  and  liability  accounts 
ordinarily  found  in  a  bank  general  ledger  and  general  balance  book. 


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TRANSACTIONS  JUNE  1.  (Individual  Deposits  Department.)  Rule 
an  individual  ledger  on  penmanship  paper  for  two  days  as  in  the  model, 
and  enter  the  customers'  names  as  there  given,  also  enter  in  the  amount  for- 
warded column  the  balances  that  appear  to  the  credit  of  the  respective  depos- 
itors at  the  close  of  the  previous  date,  May  30.  Foot  the  column.  Do  not 
enter  any  amounts  in  the  debit  or  credit  columns  until  instructed  to  do  so. 

The  following  deposits  were  received  today:  J.  B.  Alcorn,  $290.60; 
Board  &  Casey,  $1,260.49;  Peter  Craig,  $100.  Enter  these  in  the  credit 
column  opposite  the  depositors'  names  as  shown  in  the  form. 

The  following  checks  were  paid  to  be  charged :  J.  B.  Alcorn,  $49,  $52.60. 
$1.39:  E.  S.  Bennett,  $5,  $5,  $37.40;  Peter  Craig,  $56.70,  $79.42;  Peter  Zimmen 
$40,  $57.90,  $500,  $72.51,  $400.20.  Total  the  checks  to  each  person  and  enter 
the  totals  in  the  debits  column,  indicating  the  number  of  checks  in  each  charge 


142  PROGRESSIVE  BUSINESS  ACCOUNTING 

by  a  small  circled  figure  as  in  model.  (In  a  bank  these  checks  would  be 
added  in  a  separate  column,  on  a  scratch  book,  or  by  an  adding  machine,  and 
the  lists  of  the  checks  kept.) 

Foot  the  Debits  and  Credits  columns.  The  totals  there  given  are  to  be 
placed  on  tickets  for  entry  in  the  general  journal,  debiting  and  crediting 
Individual  Deposits  respectively  with  the  amounts  therein. 

To  complete  the  individual  ledger  add  the  credits  of  each  depositor  to 
his  previous  balance  and  subtract  his  debits,  carrying  the  balance  found 
to  the  balance  column  of  June  1.  Any  balances  having  no  debit  or  credit 
on  June  1,  should  be  carried  forward  to  the  balances  column  without  change. 

When  all  balances  are  carried  out,  add  to  the  total  of  previous  day's 
balances  the  total  day's  credits,  from  the  sum  subtract  the  total  day's  debits; 
the  result  should  equal  the  total  of  the  day's  balances. 

(Loan  and  Discount  Department.)  Rule  a  Loan  &  Discount  Register 
as  in  model.  The  following  loans  and  discounts  have  beem  made  for  cus- 
tomers: J.  S.  Barns,  note  our  favor  payable  on  demand,  drawing  interest, 
for  $1,000,  for  which  he  was  allowed  face.     (Enter  in  loan  column  as  shown.) 

Glidden  Donner,  note  60  days  our  favor,  without  interest,  discounted 
$5     Enter  as  shown. 

Dennis  Murphy,  note  3  months,  favor  Cole  &  Camp,  amount  $406,  for 
which  we  paid  amount  less  $3.79  discount. 

Casey  Mfg.  Co.,  note  to  us,  interest  bearing,  due  2  months,  for  $600, 
for  which  we  allowed  face. 

Having  entered  as  shown  in  model,  make  three  tickets,  debiting  Loans, 
Bills  Discounted,  and  crediting  Int.  &  Discount  with  the  totals  there  sliown. 

(Exchange  Department.)  After  ruling  draft  and  remittance  registers 
as  shown,  enter  the  sale  of  four  drafts  on  the  First  National  Bank,  New  York, 
as  follows:  No.  1,  sold  to  R.  Courbet,  payable  to  same  person,  for  $16.40, 
exchange  10  cts;  No.  2,  sold  to  Ray  Minkler,  favor  John  Wannamaker,  for 
$129.60,  exchange  20  cts;  No.  3,  Anna  Crum,  in  favor  of  J.  Merrill  &  Co.. 
for  $5.10,  exchange  10  cts ;  No.  4,  Perry  Mfg.  Co.,  to  their  order,  for  $671.40, 
exchange  70  cts. 

Total  the  day's  entries  and  make  two  tickets,  one  crediting  First  National 
Bank,  New  York,  with  the  total  of  drafts  drawn,  the  other  crediting  Collec- 
tion &  Exchange  with  the  exchange  paid  for  the  drafts. 

There  were  received  during  the  day  in  deposits  or  for  cash  paid  three 
bank  drafts,  payable  in  or  about  New  York  City,  which  we  have  indorsed 
and  sent  to  the  First  National  Bank  of  New  York,  for  credit:  No.  1491, 
dated  May  28,  by  Farmers  Bank,  Vinton,  on  Seabord  Nat'l  Bank,  New  York, 
indorsed  by  J.  B.  Alcorn,  for  $290.30;  No.  1957,  dated  May  26,  by  First  Nat'l 
Bank,  Sioux  City,  on  First  Nat'l  Bank,  New  York,  indorsed  by  P.  Craig,  for 
$100;  No.  2910,  dated  June  1,  by  Bank  of  Vinton,  on  First  Nat'l  Bank, 
Albany,  N.  Y.,  indorsed  by  J.  B.  Coe,  for  $500. 

Total  the  drafts  sent  and  make  a  ticket  debiting  First  Nat'l  Bank,  New 
York,  with  the  amount. 

(The  General  Books.)  Rule  a  general  journal  as  shown  in  model;  use 
a  half  sheet  of  ledger  paper  for  the  ledger,  and  rule  a  page  of  general  daily 
balancs  as  in  model.  Enter  the  account  titles  shown  in  the  model  on  a  sheet 
of  ledger  paper  (4  lines  to  account)  and  transfer  to  this  ledger  the  balances 


PROGRESSIVE  BUSINESS   ACCOUNTING  143 

of  May  31,  resource  balances  on  the  debit  side  and  liability  balances  on  the 
credit  side.  Notice  that  accounts  are  in  alphabetical  order  for  convenience 
in  locating  them.  After  entry,  transfer  these  balances  to  the  daily  balance 
book  and  foot. 

Enter  the  eight  tickets  from  the  departments  to  the  debit  or  credit  of 
the  respective  accounts  as  shown  in  model.  Observe  that  all  credit  amounts 
to  titles  other  than  cash  represent  cash  received  or  cash  debits,  and  all  debit 
amounts  represent  cash  paid  or  cash  credits.  Write  the  title  cash  below  the 
other  titles,  and  to  its  debit  place  the  total  of  all  other  credits  and  to  it3 
credit  place  the  total  of  all  other  debits. 

Rule  and  foot  debit  and  credit  columns  to  show  that  they  are  equal. 

When  the  journal  is  completed  all  entries,  including  cash,  are  to  be 
posted  to  the  ledger,  debits  to  the  debit  of  the  accounts  and  credits  on  the 
credit  side,  as  in  any  ledger.     Indicate  that  posting  is  done  by  check  marks. 

AVhen  the  posting  is  completed,  find  the  balance  of  each  account  and 
transfer  it  to  the  book  of  general  balances  as  shown  in  model.  The  com- 
pletion of  this  trial  balance  closes  the  day's  work. 

June  2.  (Individual  Deposits  Department.)  The  following  deposits 
were  made :  J.  B.  Alcorn,  $530.70 ;  E.  S.  Bennett,  $210 ;  D.  R.  Collings,  $150 ; 
Peter  Craig,  $2,570.91. 

The  following  checks  were  paid:  J.  B.  Alcorn,  $15.90,  $42.60,  $7.29, 
$400.40;  Board  &  Casey,  $50.42.  $73.51,  $526.80,  $73.42,  $984.30;  Peter  Craig, 
$2,000,  $7.31 ;  Peter  Zimmer,  $5. 

Dispose  of  as  instructed  in  June  1. 

(Loan  and  Discount  Department.)  The  following  loans  and  discounts 
have  been  made  for  customers,  to  which  we  give  numbers  6  to  11  on  register: 
Darrow  &  Co.,  our  favor,  dated  June  2,  one  month,  amount  $600,  discount  $3 ; 
D.  B.  Archer,  our  favor,  dated  June  2,  demand,  $800  and  interest  (loan)  ; 
Henry  Tibbits,  favor  Peter  Craig  (indorser),  dated  May  15,  four  months, 
amount  $204.  discount  $3.57;  Louis  B.  Jones,  favor  Peter  Craig,  dated  INIay 
18,  four  months,  amount  $102,  discount  $1.75;  A.  A.  Gracy,  our  favor,  dated 
June  2,  sixty  days,  for  $150  and  interest  (loan)  ;  John  Marsh,  our  favor, 
dated  June  2,  thirty  days,  amount  $350,  discount  $1.75. 

Dispose  of  as  instructed  in  June  1. 

(Exchange  Department.)  Sold  drafts  on  First  Nat'l  Bank,  New  York, 
as  follows:  To  Colgrove  &  Son.  their  order,  for  $62.90,  exchange  10  cts; 
to  Martin  &  Lane,  their  favor.  $148.37,  and  exchange.  20  cts;  to  Mrs.  E.  B. 
Dunn,  favor  Scott  &  Co..  for  $5.22,  exchange  10  cts;  to  Porter  Bros.,  favor 
Henry  Faber,  for  $467.39,  exchange  50  cts;  to  Cone  Jewelry  Co.,  their  favor, 
for  $16.28,  exchange  10  cts;  to  Fisher  Awning  Co.,  their  favor,  for  $291.66, 
exchange  30  cts. 

Received  today  for  remittance  to  First  Nat'l  Bank,  New  York,  the  fol- 
lowing drafts:  No.  421,  dated  June  1,  F.  &  M.  Bank,  Humboldt,  on  Broad 
Street  Bank,  Boston,  indorsed  by  J.  B.  Alcorn,  for  $66.90;  No.  6123,  dated 
June  1,  Bank  of  Ardmore,  on  Seaboard  Nat'l  Bank,  New  York,  indorsed  by 
J.  B.  Alcorn,  for  $142.80;  No.  1994,  dated  May  28,  Mead  &  Beach,  Minne- 
apolis, on  City  Nat'l  Bank,  New  York,  indorsed  by  P.  Craig,  for  $567.89; 
No.  643,  May  17,  Cushman  &  Co.,  Chicago,  on  First  Nat'l  Bank,  New  York, 
indorsed  by  D.  R.  Collings,  for  $150;  No.  1948,  May  19,  Parkersburg  Bank, 


144  PROGRESSIVE  BUSINESS   ACCOUNTING 

Parkersburg,  on  American  Bank,  Boston,  indorsed  by  P.  Craig,  for  $420.70 ; 
No.  42971,  June  1,  Grain  Exchange  Bank,  Milwaukee,  on  D.  M.  &  Co.,  Phila- 
delphia, indorsed  by  W.  S.  Coe,  for  $47.54;  No.  10730,  June  2,  Old  Savings 
Bank,  Waterloo,  on  Kountz  Bros.,  New  York,  indorsed  by  D.  James  &  Co., 
for  $100. 

Dispose  of  as  instructed  in  June  1. 

(General  Books.)  You  should  have  eight  tickets  from  the  three  de- 
partments Enter  as  before,  and  finish  the  day's  journal  by  entering  cash 
debits  and  credits  and  balancing  journal:  post  to  ledger  and  take  daily 
balance. 

DIRECTIONS.  Pin  papers  together,  in  this  order:  Individual  Depos- 
itors' Ledger,  Loan  and  Discount  Register,  Draft  and  Remittance  Registers, 
General  Journal,  Daily  Balances,  and  General  Ledger, 

Submit  your  work. 

QUESTIONS.  1.  AVhy  is  it  desirable  to  divide  a  large  business  con- 
cern into  departments? 

2.  How  are  the  general  results  of  department  books  carried  to  the 
general  books? 

3.  What  line  of  business  is  studied  in  this  exercise? 

4.  Name  the  three  departments  -in  banking  mentioned. 

5.  Describe  the  individual  depositors'  ledger. 

6.  Describe  the  loan  and  discount  register. 

7.  Describe  the  draft  and  remittance  registers. 

8.  How  are  the  totals  carried  from  these  registers  to  the  general  books? 

9.  How  is  the  day's  work  completed  after  entry  in  general  journal? 
10.     Is  the  department  system  of  bookkeeping  adaptable  to  other  lines 

of  business  than  banking? 

EXERCISE  XXIV 

INFORMATION  #  181.  Any  legitimate  business  is  an  organized  effort 
to  gain  by  supplying  to  people  something  of  value  for  which  they  will  pay. 
As  the  purpose  is  to  secure  the  greatest  possible  gain,  two  varieties  of  ac- 
counts should  be  kept  with  the  greatest  possible  intelligence^— those  showing 
the  sources  of  the  gains  and  those  showing  the  sources  of  the  losses.  These 
accounts  must  be  divided  and  sub-divided  so  that  at  the  end  of  a  given  period, 
one  may  tell  by  inspection  where  an  investment  of  any  value  brought  suflfi- 
eient  returns,  and  where  insufficient,  or  where  losses  occiirred  that  could  be 
avoided.  For  this  reason  the  commercial  accounts  give  to  the  accountant 
the  greatest  opportunity  to  exhibit  ability. 

^182.  The  financial  accounts  of  a  business,  such  as  the  proprietor's 
account,  cash,  accounts  and  notes  receivable,  accounts  and  notes  payable, 
are  less  complex  in  their  nature  than  the  commercial  account;?.  A  good  deal 
of  skill  is  required  to  keep  them  properly;  for  example,  th(!  books  should 
show  at  a  glance  when,  where,  and  how  all  collections  should  be  made  or 
all  debts  should  be  paid,  should  show  interest  of  im^estors  and  the  amount 
and  kind  of  resources  and  liabilities.  Yet  it  is  not  necessary  to  give  them 
the  close  analysis  that  the  commercial  accounts  require. 

:#:  183.  In  outlining  a  set  of  books,  first  prepare  a  list  of  such  commer- 
cial accounts  as  will  show  at  the  end  of  the  year  which  parts  of  the  business 


PROGRESSIVE  BUSINESS  ACCOUNTINQ  145 

should  be  expanded  in  the  coming  year,  and  which  parts  should  be  curtailed, 
in  order  to  make  the  greatest  profit.  Give  to  these  accounts  as  much  space 
as  they  will  require  in  the  ledger.  Decide  whether  it  would  be  better  to  keep 
a  general  and  special  ledgers  or  to  keep  all  accounts  in  one  ledger.  If  it  is 
decided  to  have  general  and  special  ledgers  separate,  arrange  the  general 
ledger  so  that  it  may  be  used  a  number  of  years.  The  general  ledger  would 
preferably  be  a  bound  book,  while  the  personal  ledgers  may  be  loose  leaf 
books. 

After  the  ledger  scheme  is  decided,  select  such  books  of  original  entry 
as  will  most  completely  and  easily  record  and  arrange  the  facts  of  the  busi- 
ness for  posting.  In  a  business  of  much  diversity,  many  different  special 
record  books  may  be  required.  Some  of  the  special  record  books  of  a  bank 
were  illustrated  in  Ex.  XXIII.  Equally  as  many  special  records  are  found 
in  manufacturing,  transportation,  etc. 

EXPLANATION.  In  this  exercise,  the  student  is  required  to  outline 
ledgers  and  books  of  original  entry  for  several  lines  of  business.  Attention 
must  be  given  to  the  probable  amount  as  well  as  the  kind  of  business  to  be 
recorded.  The  work  is  to  be  prepared  on  writing  paper  as  shown  in  the 
outline  given. 

REQUIREMENT   I. 

Outline  a  set  of  books  for  a  general  farm  of  160  acres,  occupied  by  the 
owner.  He  will  raise  and  sell  or  use  corn,  oats,  potatoes  and  other  produce, 
raise  and  feed  hogs,  horses  and  other  live  stock  for  sale,  will  keep  milch 
cows  and  poultry  for  profit.  May  extend  his  farming  business  in  other  lines 
if  found  profitable  to  do  so.    Cash  transactions  will  not  be  numerous. 

OUTLINE  I. 
ACCOUNTS.     Use   one   double   entry  ledger,   divided  into   three   parts: 
(1)   general  accounts,   (2)   accounts  payable,   (3)   accounts  receivable.     Keep 
a  separate  ledger  account  with  each  production.     The  details  of  one  account 
are  given  below: 

Dr.                 CORN  ACCOUNT.  Cr. 

Receiving  Side.  Giving  Side. 

Charged    with    rental    or    ground  Credited  with  the   value  of  corn 

used  for  raising  corn,  the  labor  of  produced,  whether  used  on  place  or 

caring  for  ground,  the  cost  of  ma-  sold. 

chinery   used    exclusively    for    corn  .^     t^   i     ,     i          a               'i.-!      n 

raising,   seed,   use   of  labor,    teams,  ^  Credited  at  close  of  year  with  al 

-,                ,           ,  .           .         •  •   ^  items   charged   to   corn   account   at 

and    general    machinery   in   raising  ^ 

corn,  cost  of  corn  cribs,  expense  of  ^^^     ^^  ^®* 

handling. 

The  difference  between  debit  and  credit  totals  shows  gain  or  loss. 

Keep  similar  accounts  with  Oats,  Potatoes,  Hogs,  Horses,  Milch  Cows, 
Poultry,  etc. 

Keep,  in  addition  to  these,  the  usual  ledger  accounts  with  Proprietor, 
Living  Expense,  Cash,  Real  Estate  and  similar  accounts,  accounts  payable, 
and  accounts  receivable. 

ORIGINAL  ENTRIES.  Use  a  two-column  day-book  journal  for  original 
entries.     The  entries  may  be  grouped  monthly  from  a  mgmo  book  as  in  Ex. 


146  PROGRESSIVE  BUSINESS  ACCOUNTING 

IX.,  if  desired.    Ordinarily  a  special  cash  book  is  not  necessary,  as  the  pay- 
ments and  receipts  of  cash  are  not  active. 

REQUIREMENT  II. 

Outline  a  set  of  books  for  a  jobbing  grocery  business,  in  which  there  are 
many  notes  received,  and  in  which  invoices  or  bills  of  goods,  both  payable 
and  receivable,  are  constantly  discounted  for  cash  payment.  The  books 
should  be  arranged  for  about  $100,000  business  per  year.  Illustrate  the  use 
of  one  representative  account  as  in  Outline  I.  Three  ledgers  are  to  be  used. 
Give  books  of  original  entry  and  explain. 

REQUIREMENT  III. 

Outline  a  set  of  books  for  a  dealer  in  agricultural  implements,  in  which 
consignments  are  received,  sales  are  made  often  for  notes,  grain  is  bought 
and  shipped.     The  business  may  run  from  $25,000  to  $200,000  a  year. 

QUESTIONS.  1.  What  two  varieties  of  accounts  are  said  to  require 
of  the  bookkeeper  the  greatest  intelligence? 

2.  Can  new  commercial  titles  be  entered  in  the  ledger  if  their  presence 
would  better  explain  the  sources  of  losses  or  gains? 

3.  Do  the  financial  accounts  show  as  great  a  variety  of  treatment  as 
the  commercial  accounts? 

4.  When  outlining  a  set  of  books,  how  are  the  titles  of  commercial 
accounts  chosen? 

5.  Plow  can  one  determine  what  books  of  original  entry  to  use  in  a 
given  business? 

EXERCISE  XXV 

TO  THE  STUDENT.  A  mastery  of  the  accounting  principles  of  the  pre- 
ceding sets  and  exercises  (bookkeeping),  combined  with  good  business  writing 
(penmanship),  and  ease  with  accuracy  in  the  use  of  figures  (arithmetic) 
should  enable  a  person  to  adapt  himself  readily  to  the  requirements  of  the 
majority  of  bookkeeping  positions. 

One's  first  office  position  is  usually  that  of  assistant,  or  he  may  be 
given  the  management  of  a  certain  division  of  the  entire  work  of  an  office." 
If  he  is  an  assistant,  he  should  endeavor  to  conform  his  bookkeeping  methods 
to  those  of  his  principal.  He  should  study  to  increase  his  efficiency  by  using 
all  of  his  knowledge  of  accounts  to  aid,  not  to  antagonize  the  office  methods 
as  he  finds  them.  He  should  not  try  to  revolutionize  the  bookkeeping  of  an 
established  office,  even  though  he  may  be  satisfied  that  his  methods  would 
produce  better  results  with  less  labor.  But  he  should  study  the  facts  and 
requirements  of  the  business  in  which  he  is  engaged.  He  should  be  ready  to 
improve  his  part  of  the  work  when  opportunity  presents.  Business  condi- 
tions are  such  that  a  person  who  will  do  well  the  work  of  a  minor  position 
may  expect  to  find  his  responsibilities  increasing  in  number  and  importance 
until  he  has  attained  to  his  full  salary  earning  capacity. 

But  the  position  of  assistant  should  be  passed  as  soon  as  possible.  Mind 
work  is  more  valuable  and  better  paid  than  mere  hand  work.  The  person 
who  has  the  ability  to  keep  books  well  undoubtedly  has  the  ability  to  do 
many  other  needed  things  well.     It  is  the  opportunities  to  be  useful  in  a 


PROGRESSIVE  BUSINESS  ACCOUNTING  147 

wider  way  that  should  be  sought  by  any  young  person  beginning  his  business 
career  in  an  office. 

To  begin  with,  the  amount  of  salary  at  the  very  beginning  of  one's 
work  is  not  so  important  as  is  the  character  of  the  house  for  which  one 
works  and  the  kind  of  men  one  works  undeer.  Ordinarily  the  larger  and 
wealthier  business  houses  are  conducted  by  the  men  of  the  broadest  minds, 
who  are  willing  to  see  those  in  their  employ  advance  as  rapidly  as  possible 
in  the  ability  to  earn  money.  But  this  is  not  always  the  case.  The  person 
offering  his  services  as  a  bookkeeper  should  consider  these  facts,  and  not 
offer  his  services  blindly  to  any  one  whose  general  business  methods  do 
not  appeal  to  him.  As  soon  as  the  applicant  has  secured  a  position  that  is 
satisfactory,  he  should  consider  himself  a  part  of  the  business  and  should 
endeavor  to  make  his  work  as  valuable  as  possible. 

A  person  assuming  the  position  of  bookkeeper  should  see  that  the  books 
have  been  left  in  condition  by  the  person  whom  he  follows.  He  should 
check  the  last  trial  balance  with  the  books,  and  if  errors  are  found,  report 
them.  He  should  see  that  the  business  vouchers  are  properly  filed.  If  he  has 
charge  of  cash,  this  should  be  carefully  counted,  and  compared  with  the  cash 
book.  When  leaving  a  bookkeeping  position,  care  should  be  taken  to  leave 
the  books  properly  balanced  and  the  vouchers  properly  filed. 

Time  is  the  valuable  thing  in  an  office.  It  is  the  bookkeeper's  business 
to  give  any  information  contained  in  his  books,  and  give  it  quickly.  The 
books  should  bo  perfectly  indexed,  always  posted  to  the  date,  always  in  their 
places.  A  bookkeeper  cannot  expect  to  advance  if  he  requires  his  employer 
to  spend  idle  time  waiting  for  the  bookkeeper  to  find  something  that  has 
been  misplaced  or  to  post  some  account  to  date  when  the  account  should  be 
found  already  posted  to  date. 

Attention  to  all  matters  that  make  one  ready  when  an  emergency  arises 
is  really  time  saved.  Customers'  statements  of  account  should  be  prepared 
on  the  evening  of  the  last  day  of  the  month,  not  a  few  days  after  the  first 
of  the  month.  Bills  of  goods  shipped  should  be  sent  when  the  goods  are 
shipped,  not  a  day  or  several  days  afterward.  Cash  on  hand  to  be  deposited 
in  the  bank  should  not  be  forgotten  and  kept  until  the  following  day.  The 
bank  balance  should  be  always  plainly  before  one,  not  a  few  checks  behind 
hand.  A  good  bookkeeper  never  has  his  mind  encumbered  with  things  that 
he  has  postponed  and  is  trying  to  remember  to  do.     Always  record  them. 

Time  may  also  be  saved  if  the  bookkeeper  will  begin  on  his  first  day 
to  systematically  learn  the  common  things  about  the  business,  such  as  the 
telephone  numbers  of  the  persons  or  firms  who  are  frequently  called,  the 
names  of  the  frequent  customers  or  business  callers,  the  names  and  addresses 
of  all  persons  who  do  work  of  any  kind  about  the  place.  Not  only  that, 
but  he  should  study  to  make  their  relations  with  the  place  as  satisfactory  as 
possible. 

One  thing  that  is  appreciated  highly  in  a  bookkeeper  by  business  men 
is  absolute  reliability.  Any  matter  intrusted  should  be  carried  out  absolutely, 
regardless  of  whether  anyone  sees  it  done  or  not.  It  is  of  great  value  to 
any  young  person  to  be  known  as  one  who  never  forgets  and  never  fails 
to  do  all  matters  entrusted.  In  order  to  be  perfectly  reliable  in  such  matters, 
a  pocket  memorandum  book  and  pencil  should  be  always  ready.     In  this 


148  PROGRESSIVE  BUSINESS   ACCOUNTING 

book,  among  other  things,  should  be  placed  the  names  of  new  acquaintances 
whose  names  should  be  recalled,  appointments  of  various  kinds,  things  to 
be  done,  etc. 

The  bookkeeper  should  study  the  business  in  which  he  is  engaged, 
whether  it  be  retail  business,  wholesale,  manufacturing,  local,  mail  order, 
or  what  not.  He  should  familiarize  himself  with  the  advertising  methods. 
He  should  thoroughly  know  the  collection  methods. 

After  he  has  learned  the  buying,  selling,  and  collection  methods  of 
the  business,  he  should  take  a  lively  interest  in  the  commercial  accounts 
so  that  he  can  exhibit  from  his  books  the  sources  of  gains  and  losses  accu- 
rately. If  he  can  do  this,  he  can  give  valuable  suggestion  to  his  employer 
and  his  employer  will  seek  his  advice.  A  person  no  less  important  in  busi- 
ness affairs  than  Andrew  Carnegie  has  frequently  said  that  his  ventures  are 
never  made  without  the  advice  of  his  accountants. 

The  person  of  sound  mind  and  body,  temperate  in  habits,  cheerful  in 
disposition,  and  good  in  morals,  who  will  work  persistently  along  the  lines 
indicated,  should  occupy  an  important  place  in  the  house  where  his  energies 
are  directed,  or  should  eventually  become  the  master  of  a  business  of  his 
own.  But  he  should  remember  that  it  is  as  an  accountant  that  he  is  expected 
to  be  highly  efficient.  It  will  well  repay  him  to  always  have  at  hand  the 
latest  accounting  magazines  and  to  continue  the  study  of  accounting  in  its 
more  specialized  forms.  The  demand  for  the  highest  quality  of  work  along 
these  lines  never  can  be  fully  supplied. 

QUESTIONS.  1.  What  three  branches  of  study  are  mentioned  as 
necessary  to  the  bookkeeper? 

2.  How  should  an  office  assistant  act  with  reference  to  the  methods 
already  in  use? 

3.  Should  he  venture  to  improve  methods  before  carefully  studying  the 
conditions. 

4.  Is  it  profitable  to  attempt  to  keep  books  before  learning  the  nature 
of  the  business? 

5.  Why  should  all  detail  work  be  kept  up  to  the  date  ? 

6.  .  Name  some  general  ways  in  which  a  bookkeeper  may  become  valu- 
able to  an  office. 

7.  What  is  said  of  reliability? 

8.  How  can  one  be  sure  that  he  has  attended  to  all  matters  to  be  remem- 
bered? 

9.  Which  class  of  accounts  should  a  bookkeeper  first  become  familiar 
with? 

10.  What  should  be  learned  before  attempting  to  systematize  the  com- 
mercial accounts? 

LEGAL  FORMS.  The  forms  following  illustrate  the  manner  of  pre- 
paring deeds,  mortgages  and  other  papers.  These  should  be  written  with 
great  care  and  carefully  ruled. 

As  they  are  generally  to  be  recorded  by  the  county  recorder,  they  are 
not  complete  until  acknowledged  before  a  notary  public  or  other  official  em- 
powered to  take  acknowledgments.  The  form  of  acknowledgment  accom- 
panies the  deed  on  page  150.  The  acknowledgment  should  accompany  the 
other  forms,  but  as  the  space  for  it  is  usually  found  on  the  reverse  side  of 
the  instrument,  the  illustration  is  omitted  except  in  the  deed  form. 


Warranty  Deed 


(Form  No  :>0) 


>IiTT    PARITOTT   i    90NS    CO.,    WATERLOO,    IOWA 


KNOW  ALL  MEN^  BY   THESE   PRESENTS 
That:. 


-rj^;:/^rr:?^^ 


■of- 


■•  m  consideration  of  the  sum  of 
-DOLLARS. 

.......ot 


County  and  State 


O^yZ-^^^t;'-'..^!^^ 


do  hereby  SELL  AND  CONVEY  unto  the  saxd 
the  following  described  premises  situated  vnrrr^ 


-r^^:^^:jfrf::?r:'>:3r::<^^^ 


TO  EAVE  AND  TO  HOLD  the  premises  above  described,  with  the  appurtenances,  unto  the  said 

:. : and \ V.T:',!^rr:<r-^/.. 


heirs  and  assigns  forever,  and- 


that:. 


rdo  hereby  covenant  xuith  the  said.r 


■rhwfully  seized  of  said  premises;  that  they  are  free  from  encumbrance 


..^^^■!^<=^?4-:<;Zr<C4^ 


that )^^. ha^^t^rr^r^tiood  right  and  lawful  authority  to  sell  and  convey  the  same.-rrr'^^^ 


do  hereby  co^'enant  to  WARRANT  AND  DEFEND  the  title  to  said  real   estate    cmd   appurtenances 
.thereto  belonging,  against  the  lawful  claims  of  all  persons  whomsoever;  «n«l : 


— henby  itUmjunh :....ull >  lyhl 

of  d^uiot',  ci^  aii t^tjht  under  (he  H«m«tmd  Lnu-s  of  the  SMa  «f  Iowa, 

in  and  to  doccmbod  ppomioeo. 

Signed  this~^^<rr-<L^a-^=^y  of 


A.  D.  19/ /2.. 


STATE  OF  WW A^^S^^Ii^:^^^-'-^^  ss: 

On  thisr^^^r^^ii^day  of i:!^dC:ti€.<^^rri>c,<t-<^. .4.  D.  19/../2....,  before  me  personally 

appeared 


....^:?!><^l^L^^-~^...r:^^<Q:^^^ 


to  me  known  to  be  the  person nathed.  in.  and  ivho  executed  the  foregoing 

instrument,  and  acknowledged  that. rr::?*^?:^^:^ executed  the  same 

ts...:rr^r%::<k:<^.. voluntary  act  and  deed. 


Notan/  J'ublic  in  and  for  said  County. 


UOSTGAGE 


Matt.  PiUHOiT  i  sons  Co.,  'wateiiloo,  iowa. 


KKOW  ALL  ME. 
That 


BY  THESE  PRESENTS: 


!?:5'!'^.....^!;i^L^'r:5!^?r^......<S^^ 


ol^rrif^'!^r<?h^>:7>r7<i.^^  State  ofrrrrr-:^.! 


—in  consideration-  of  the  sum  of 
DOLLARS, 


in  hand  paid  by.. 

ofrr~^^ir:f!>:r:iS^rr:rC/. Cmtnty,  State  o/....te^i^^^*^rrr:7:r^,rm!^rr<rr«^:r:rflfo  hereby  sell  and  convey  un(o  the 


said.T  ^ 

the  following  described  premises,  situated  M»yi'*^2-<^«*-'*r^?^ri?'rr?^^  Iowa,  to-wit: 


thatr^^^A^ J^'^^r^awjully  seized  of  said  premises;  that 


-right  tinder  the  home.'<lead  laws  of  the  State  of  Iowa,  in  and  In  the  above 
di-Kcribed  premises. 

PROVIDED  ALWAYS,  and  these  presents  are  upon  the  express  conditum,  that  if  the  said 

T.J,.  r'A^i4dT<fi:riieiTS,  execxUors  or 


administrators  shall  pay  or  cause  to  be  paid  to  the  said 

:^;^:g::S^^gtr^,  cxccutors,  administrators  or  assigns,  the  sum  of 

<^«^2^?l2-,^-<--^?C«r-<^^  on  thi-^^^-^-^'^-^ay  of ^^^f^rr-^'^r^.. 10// 

<^^^^'^r<^.r^?^i£<e>'rt^^  Dollars,  on  the^^^-^-^^^^y  of J^*^^yt-eJ...... 19/.^ 

<i^^^^<l^r.r:?^C2J«.rr*%<Cr*«.-^^     Dollavs,  OH  thir^^^-^rfiit-^rday  of ^^,^^^<<?n,!<X.. 19/^ 

(^^'^^■e<-,.::ii3^,.a.r-<<.^iC^^        Dollars,  on  ther^^'^i^^ilfrday  of .^;,^««<?:*^. 19./.^ 


..Dollars,  on  the 


day  of'. 


-w 


mlh  mi  crest  on  all  of  said  money,  from  this  date,  at  the  rate  o/'T-r^r'^rr?s<^rr™per  centvm  per  annum, 

rpromissory  notes  of  said 
of  even  date  herevrith. 


lints  paid,  payable  annually,  according  to  the  tenor  of 

then  these  presents  to  be  void,  othenvise  in  full  force  and  effect. 


And  it  Is  stipulated  In  said  note  and  In  this  rnortgaee  that  should  an.T  of  aald  Interest  not  be  paid  irtien  due  l>  almll  bear 


Interest  at  the  rate  o».-^-fr^-^-1^T)er  cent  per  nnntim  from  the  time  the  same  hecomes  due.  and  that  this  mortease  Bhall  also 
stand  as  security  for  the  Mme :  and  It  Is  stipulated  that  a  failure  to  pay  anv  of  said  Interest  or  principal  within  thirt.v  days 
sfter  It  becomes  due.  shall  cause  the  whole  of  said  sum  to  become  due.  and  this  mortKaee  may  be  foreclosed  thereupon  iium»Mjlately 
for  the  whole  of  said  money  and  Interest.  And  It  Is  also  stipulated  that  should  any  taxes  on  the  above  descrtiied  land  not  lie 
paid  when  due,  the  mortjfaeee  or  bis  assigns  shnll  have  the  rlpbt  to  pay  the  same,  and  this  mortcage  shall  stand  security  for 
the  money   so  advanced  and  Interest   thereon  at   the   rate  of  eight   per   cent    per   annum,    payable   annually. 

It   Is   furyier  agreed   that  mortgagor  shall   keep  buildings  and    property    covered    by    this    mortgage    Insured,    for    At    least 

-rT'^^^^f^^  T-r*r~?r*r:~;^CT  its  actual  cash  value  In  good,  reliable  Insurance  compnnlea  appmred  by  mortgagee,  with  clause 
ntlnched.  "Loss,  If  any,  payable  to  mortgagees,  as  their  Interest  may  appear."  and  shall  pay  all  premiums  In  counectlon  there- 
with. In  default  of  same,  said  mortgagee  shall  have  the  right  t"  Insure  lald  hulldlnga  and  property  and  pay  the  premium's  therefor 
and  this  mortgage  shall  stand  as  security  for  the  moneys  so  advanced  for  premiums  and  all  enpensea  In  conn«ctlop  tberewltli, 
and  all   money  so  advanced  shall  draw  Interest  at  the  rate -of  eight   per  cent  per  annum. 

In  event  of  the  foreclosure  of  this  mortgage.  It  Is  agreed  that  a  reasonable  attorney's  fee  shall  !«  I>y  the  Court  also 
taxed  and  Included  by  the  Court  In  the  decree  of  foreclosure  of  this  mortgage,  and  the  mortgage  shall  also  stand  as  w^-'urlly 
for  the  same,  and  the  same  shall  be  Included  In  the  special  execution,  snd  be  made  with  the  other  money  and  coata  on  tt» 
Hherier's  sale  of  said  land.  ^_ 

Signed  thiy^^<r'i^day  of ..rrrr^^^^:f^:2:^:r^..< A.  D.,  l9/.<>. 

Jp''^^'':?:?-frrt?r:?f!*»?^^ 


they  are  free  from  incumbrance;  /fca/...>«ri25^rr^^..T7— ^ — .ha<^t<rr£^ good  right  and  lawful  authority  to  sell 

and  convey  the  same  and  the  said m/j(rZ<riK.riirr^......^^rr:^t:::7^lisC^r. 

— — — - — rrrrr. hereby  relinquishes  all—^rri^<i&<iL:r..    rujhl  to  doner,  and  all 

'.....■;igC:4g,r<fcr-.^ 


CHATTEL  MORTGAGE.   No.  >-.twm 


(Form  No.  (2) 


UATT    PABBOTT    *    60X8,    KiTlBtOO,    lOWi. 


Know  all  Men  by  these  Presents: 


That 


~-;;?^'-*2^-'ir-^^ 


of  the  Coxuity^'of^^^<^iiZ.-<i''^^'^^''-^^  State  of  Iowa,  party  of  the  first  part  in  consid  ration, 

of  the  sum  ot''='^^^^^<^'-^ ^-'^'^^  .  DOLLARS 

to  him  III.  hand  paid  by ^---r^'*^^^^-^'*r7fCri^^  second 

part,  has  bargained  and  sold,  and  by  these  presents  does  convey,  transfer  and  set  over  unto  said 
fiarty  of  the  second  part,  his  heirs,  successors  and  assigns,  the  following  ^oods  and  chattels  to-wit: 


<i2i:--^*<i<in*^'*>^^!.=^*^<t.^^ 


TA"  idioee  dr^crihed  chatltU  arc  noiu  iii  the  possestiion  of  the  said  parly  of  11^  first  part  at  mid  upon 

A- 


llic  fiilluwiiig  described  premtscs.  to-irit: 


,n  saur(^^^^^Z--<f^^^^<A^-^Z--*^^^^ County,  Iowa. 

TO  HAVE  AND  TO  IKil.D  Ihc  sauie  forever.  And  the  said  first  party  hereb"  covenants  and 
r<;i)rcscnls  thut  said  clialtcis  are  oniied  by  him,  (hat  same  are  free  from  any  incumbrance  xvhaievcr  and 
(Jidl  he  ii:ill_  vairant  and  defend  the  same  against  (ill  jiersons  tilicmsoever. 

Vroii  condition..  HOWEVER,  that  if  the  said  FIHST  PARTY  shall  pay  (o  (he  party  of  (he  second 


liiiri.  or  assigns,  /risw-^S^*'-^  ' ' certain  promissory  notes,  dated- 


...y^„ 19/.^-,  and  described  as  follows,  to-wit: 

One  for.(^^^-1^-'^-<>'---r^^^^  Dollars,  payable .A!^Z:tZ^ p^ 19/j(P. 

One  for  (^^^'fit.^-^Ltif<^%-<^^^  payable J^T^^^^^rll^. .^^^ lOZ  O 

One  for. - ._ .„ .^^^^^^^Z^ZBollars,  payable. ..^^H^K... 

One  f&r.. ..^^^t^^Z... JDoUars,  payable.- ..^^^^^^^Zl... — JP 

One  /or^ss?^^^^. - -. Dollars,  payable^^^^"^ _ _19 

mth  interest  at  (he  rale  ofs^^^c^n't^rper  cent  per  annum,  according  to  the  tenor  (hereof,   then,  these 
presents  to  he  void,  othern-inc  in  fail  force. 

And  the  said  party  of  the  first  part  does  hereby  covenant  and  agree  uith  the  second  party  that  in  case  of  default 
made  in  payment  of  the  above  mentioned  promissory  notes,  or  any  of  them,  or  in  case  of  any  attempt  to  dispose  of  or 
remove  from  the  said  county  wherein  the  same  arc  now  kept,  the  aforesaid  goods  and  chattels,  or  any  part  thereof,  or 
whenever  the  said  second  party  shaU  deem  himself  insecure,  then,  in  either  of  said  events,  the  whole  amount  of  said 
indebtedness  shall  become  due  and  fayable  at  once  and  this  mortgage  may  thereupon  be  immediately  foreclosed  there- 
for, and  in  that  case  it  shall  be  lawful  for  said  second  party,  or  assigns,  by  himself  or  agent,  to  take  immediate  posses- 
sion of  said  goods  and  chattels,  wherever  found,  the  production  of  these  presents  being  sufficient  authority  therefor, 
and  to  sell  the  same  at  public  auction,  or  private  sale  (at  the  option  of  the  second  party),  or  so  much  thereof  as  stuill 
be  required  to  pay  the  amount  of  said  mortgage  indebtedness,  with  all  reasonable  costs  and  expenses,  pertaining  to 
the  discovery,  taking,  keeping,  advertising  and  selling  of  such  property,  and  a  reasonable  attorney's  fee  for  all  ser- 
vices rendered  in  connection  therewith.  If  second  parly  elects  to  sell  said  property  at  private  sale  it  shall  be  lawful 
for  him,  to  do  so  xvithout  notice,  and  at  the  best  prices  by  him  attainable.     If  he  elects  to  tell   the  same  at  public 


auction,  then  said  sale  shall  take  place  at...<</r.ji:X<^C.^i(>-:Z.,r£^^tfrt?. :...in,the  County  0}      __ _ 

and  State  of  Iowa,  after  giving  at  least' ten  days'  notice  thereof  by  posting  up  written  notices  in  three  public  places  in 
said  County;  and  said  first  party  hereby  authorizes  the  person  conducting  the  said  public  sale  to  adjourn  the  same,  if 
deemed  in  his  opinion  necessary,  from  tiyne  to  time  until  said  property  is  sold.  And  in  case  Of  sale  by  either  of  the 
above  methods,  the  person  so  making  and  conducting  the  same  is  liereby  authorized  by  first  party  to  give  a  bill  of  sale 
to  the  purchasers  of  said  property,  which  shall  be  conclusive  as  to  the  regularity  of  all  proceedings  connected  herewith, 
and  shall  convey  absolutely  all  the  right  and  title  of  said  first  party  in  and  to  the  property  so  sold.  If  from  any  cause 
the  amount  realized  from  such  sale  shall  fail  to  satisfy  said  debt,  with  interest,  costs  and  charges,  the  first  party  agrees 
to  pay  the  deficiency,  and  any  money  remaining  after  paying  said  sums  shall  be  paid,  on  demand,  to  the  first  party. 


iln(i..TrT^=====. Trrrrrr^r^rr^"^ ...wife  of  the  said  first  party,  in  consideration  of 

and  being  fully  advised  in  the  premises,  does  hereby  expressly  concur  in  the  making,  execution  and  delivery  hereof, 
for  the  uses  and  purposes  expressed  and  does  hereby  waive  and  release  all  her  rights  in  and  to  said  mortgaged  prop- 
erty, arising  and  existing  under  and  by  virtue  of  the  Exemption  Laws  of  the  State  of  Iowa. 


Dated  thi9<^:^^-^''-z=ti4ay  :/      '^..::^....d....-^.  "^...r.. .1. 


D.  19/..£>... 


AGREEMENT  OF  CO-PARTNERSHIP. 


Tpis Agreement  Witnesseth,  That 


of ■ have  this  day  agreed  to  associate  themselves  together  as 

a  co-partnership,  for  the  purpose  of  engaging  in  the  business  of  buying  and  selling  for  profit. 


atTr<?^<:?rr^UCr-t?^:?7r .'^  ....>.. ■. inrrTrrf^r-^i'^r:?:^^?^.  (. ■■Countyrr7-.br<^r?<gg"r?^r ■ 

r./^/Zr:?^f<>?ri7:t^'t<-9rut^. . .  JC.  C^-r^r-:?:7^r?r?<-^^<y. 


under  the  firm  name  and  style  of 


the  term  of|aid  co-partnership  to  continue. . . .'.' .'$^?rrr^rr^^Tr^<^^^ vearr^^.  from  and  after  the 


Tday  of: 


r/. i(^tP.  unless  sooner  dissolved. 


The  ijnvestment  contributed  by  the  aforesaid  partners  is  to  be  as'  herein  set  forth,  to-wit : 

•''^"^  xV^-'g2..---;^'2--->z..-^-^?-?,.,<^.     ...■ '..  contribntes  .-r.^?rr*?:ri^ri?C<rvrr<rr??rr1=rr^^ir 


■--TTTTTTOntributes.-.<^:gi;r^^r(^C<:<^S^^^ 


^^^i-c^     tg^--gZ-^Z^> 


l^^:^^>fi^r^h??r^.  '-^^-:^/r:^^''f^o-yTy  ^^.  Vr^ 


The  profits  or  losses  of  said  partnership  business'^are  to  be  shared  in  the  following  proportions: 


I  win 


With  respect  to  the  time  and  services  given,  and  the  compensation  to  Se  received  it  is  agreed  thatr 


It  is  ako  agreed  that  aside  from  the  profits  and  compensations  heretofore  mentioned,  neither  partner  is  to  withdraw 
from  the  business  any  money  or  other  property,  except  with  the  written  consent  of  the  partners. 

It  is  especially  agreed  that  neither  of  the  parties  to  this  contract  shall  sign  or  endorse  any  bank  note,  draft  or  com- 
mercial paper,  oor  stgn  any  official  or  other  bond,  nor  do  any  other  act  to  create  a  financial  liability  or  obligation,  without 
the  written  conSENT  6f  his  co-partner. 

At  the  expiration  or  sooner  determination  of  said  co-partnership,  the  business  and  property  of  said  firm  may  be  closed 
out  by  sale ;  and  after  all  debts  and  liabilities  are  paid  and  discharged,  the  amount  remaining  shall  be  divided  between  the 
partners  in  the  ratio  of  their  respeetive  interests;  or,  if  the  parties  so  agree,  the  co-partnership  may  be  continued  for  such 
further  time,  and  upon  such  .terms  as  the  members  thereof  may  be  able  to  agree  upon. 


Witness  our  hands 


thi*=r^^2^::^;^r-?day  of;^<^ir??rfr^^^^!^rr^!^-rTTr  l 


»/<?- 


LE.ASE 


This 


fTitt    Made  between 


"^:. 


of  the  County 


o{7<^^^!^^i:>:^fi>rtr^<^^  State  oirrr^^^^^:^:^^^^^ 


t){  the  first  part,  and 


of  the  second  part  witnesseth :   That  the  said  party  of  the  first  part  has  this  day  leased  unto  the  party  of  the  second  part 
the  following„d^cribed  premises,  to-wit: 


And  it  is  further  agreed  that  if  any  rent  shall  be  due  and  unpaid,  demand  therefor  being  waived,  or  if  default  be  made  in 
any  of  the  covenants  herein  contained,  it  shall  then  be  lawful  for  said  party  of  the  first  part  to  re-enter  the  said  premises 
and  remove  all  persons  and  property  therefrom,  or  hi  may  recover  possession  thereof  by  action  for  the  forcible  detention 
of  said  property. 

And  the  said  party  of  the  second  part  agrees  to  hire  said  premises,  and^o  pay  the   party   of^he  first   part   there- 
for the?r^r!<-rr?r?rr?'rTrrfr^7-r?yrc<v'.  f. rent  of 


to  be  paid  as  follows,  to-wit: 


except  when  said  premises  are  untenable  b»  reason  of  fire  from  any  other  cause  than  the  carelessness  of  the  party  of 

the  second  part,  or  of  persons  of. . . ;  .^^?7-r<<<^.\. family  or   in ^^?^<<-r^<^ /. employ   or   by 

superior  force  or  inevitable  necessity. 


And  the  said  party  of  the  second  part  covenants  that.j< 


enants  tha 


.will  use  said  premises  as  a: 


and  for  no  other  purpose  whatever;  and  that. 2j(^V^<_... especially  will -not  use  said  premises  nor  permit  the  same  to  be 

used   for  any  unlawful  business  or  purpose   whatever;   thatrrrr??^-?^. will  not  assign  this    lease  nor  let    or 

underlet  -  said    premises    without    the    written    consent    of  the^  lessor,    under    the    penalty    of    the    forfeiture    of    alt 

•.'/^^ri<i-:f^ 1  ights  under  the  kase:  and  that:'7rr/r?T-^^. . .  will    use    due    care    and    diligence    in    guarding 

said  property  from  damage;  that /rf^,^<\ will  keep  the  same  in  such  repair  as  the  same  now  is,  or 

may  at  any  time  be  placed  in  by  the  lessor,  damages  by  superior  force,  inevitable  necessity,  or^fire  from  any  other  cause 

than  that  from  carelessness  of  the  lessee,  or  persons  of . . . .  .'A<r-r<t-f^f<. familv  or  in-rrrr^r?<^^.  v- . emplov  excepted, 

and    that    a^    the    expiration    of    this    lease,    or    upon    a  breach  by  said  lessee  of  any  of  the  covenants  herein  con- 

tainedrr.-fvVt^.  • will,  without  further  notice  of  any  kind,  quit  and  surrender  the  possession  of  said  premises  in  as 

good  condition  as  reasonable  use,  natural  wear  and  decay  thereof   will   permit,   damages   by   fire   as   aforesaid,   supwior 
force  or  inevitable  necessity,  only  excepted. 


IN  WITNESS  WHEREOF,  the  said  parties  have  hereunto  subscribed  their 


day  of: 


:A.  D..  lo/.^?. 


BILL  OF  SALE 


(Form  No.  115) 


UATI.   PABBOTT  A    SONS  CO..  WATEBL'X),   lOWi. 


KNOV^-   ALL  MEN  BY  THESE  PRESENT, 


That 


■..in,   the  County  o^ 


and  S^ale  of 


'^-'^^^i.^Lr^e^rr:-^. 


^-^^5^^:25-^:^^- 


->.oj  the  first  part,  in  considerallon  of  the  sum  of 
DOLLARS. 


in  hand  paid  by..— -  


'^^^^-^^■-C<.^^^ 


•County  and  Slate 


of-T^^^::^--£-€^'-t<-^:U^J^^^ 


of  the  second  part,  the  receipt  ivhereof  is  hereby  achiowlcdged,  have  bargained  and  sold,  and  by  these 
jucsenls  do  grant  and  convey  unto  the  said  party  of  the  second  part,  ~::-:/i<<rr^^.. heirs  and  assigns, 

..(^^....-=:^^L::<£,l£:ri!^^        „ .-. 


'y'^'%-'^'ii<rfA::rl!irr>rt,^:(^ 


-'(i^*^;^4--^'r^<''^-:<^^^  ..■r:pi^^^<g>4X;<f<>;^;i;^;t^^ 


l,frS^::e:Z-:^!^^::::^r5fC:!?^^ 


--^<^'-<L-i^rrifC.<r?X^...^'^^ 


-2lrah-ik^......ar:^?ri^...:.^: 


-z:.do  hereby  covenant  ivith  the  said  party  of  the  second  partr-<^<<ri-;^^... executors 
■and  assi.gns,  to  icarrant  and  defend  the  sale  of  said  property  hereby  made  to  the  said  party  of  the  second 

;;aH,  — -^^-^CruC-^ executors  atnd  assigns,  and  against  all  and  every  person  whomsoever. 


Arid-.Trr. 


IN  WITNESS  WHEREOF... 
day  o/^— -^^^^^j^<^-:<.^/ 19/a,. 

I?f  PRESENCE  OF 


..have  hereunto  geL.rrrr?^>^t^. hand.Trr..ihis /.^^■^Zr^^^^H^. 


INDEX 


Page 

Acceptance    f^6 

Accounts 8  54 

Account  sales  ^'-i 

Acknowledgement 149 

Articles  of  incorporation 114 

Balances  of  account 15 

Bank  account    60 

Bank  bookkeeping 137  to  144 

Bankruptcy    92 

Bill  of  lading   83-120 

Bill  of  sale   154 

Capital  stock    106 

Cash  account   8 

Cash   books    31-32-33-41-102-103 

Cash  books  (single  entry)   134 

Cash  check   41 

Cash  items    66 

Cash  sales  and  purchases   49-50 

Cash  value  of  account 20 

Certificates  of  deposit  126 

Checks    40-41 

Closing  the  ledger   20-24-57 

C.  O.  D.'s ■ 98 

Collection  items 66 

Columns  of  journal  and  ledger  . .  7-15 

Commercial  accounts 26 

Commission  85 

Compound   entries    28-29 

Consignments  73-84-85 

Contra  columns  121 

Controlling  account   98 

Co-partnership  agreement   152 

Corporations  *106 

Day  book  (Single  entrj')    133 

Debit  and  credit  rule   8 

Deed    149 

Departments     137 

Deposit  tickets 39 

Discount 66 

Dividends     107 

Double  entry    10 

Draft  register 139 

Drafts   65 

Errors — how  located 88-89 

Exchange  ^^ 

Expense  account  20 

Expense  bills   80 

Financial  accounts   ^6 

Folio  columns    15 

Forwarding   45 

Furniture  and  Fixtures 20 


Page 

Gains     20 

General  balances — bank   141 

General  journal — bank 140 

Group  titles 97 

Headlines     6 

Index     37-38 

Individual  depositors'  ledger  ....  138 

Indorsements    60-65-66 

Insolvency  92 

Installment  certificate  117 

Installment  ledger 107 

Interest    27 

Inventory  20-55-56 

Journals    14-15-27-48-63-100 

Labor    27 

Lease    153 

Ledger  8-14-31-85 

Ledger  closed  22-23 

Ledger  divisions   31 

Ledger  index    37-38 

Liability  inventory   92 

Lists    57 

Live  stock  16 

Loan  and  discount  register   ....  139 

Loans    86 

Loss  and  Gain   21 

Mercantile  transactions    31 

Merchandise   account    13 

Merchandise  discount   47 

Minute  book  114 

Money  columns   6 

Mortgage — chattel 151 

Mortgage — real  estate 150 

Negotiable  paper 66 

Net  gain  or  loss 21 

Net  proceeds   83 

Net  worth   20 

Note,  promissory  52-54 

Note  sales  and  purchases 51 

Notes  receivable  and  payable  . . .  .25-26-76 

Notice  of  incorporation 116 

Opening  entries  32-68-69 

Orders '.  65 

Order  sheet 42-43 

Outlining  books  144 

Parties  to  commercial  paper  ....  40 

Partnership    69-70-71-72 

Partnership  agreement 153 

Part  payments  82 

Pencil  footings 18 

Posting 10-15 

Profit,  how  shown 8 


Page 

Property,  purchase  or  sale 25 

Proprietor's  net  worth 68 

Purchase  book 31-34-43 

Real  estate  account 13 

Receipt 47 

Red  ink  entries  24 

Remittance  register  139 

Rule  for  debit  and  credit   8 

Ruling  directions 6 

Sales  book   31-35-64-104 

Sales  for  notes 51 

Shipments   73-83 

Shipping  address 121 

Short  extensions  107 

Sight  drafts 66-87 

Single  entry   132 

Six-column  journal   135-136 

Special  column  books 96-136 


Page 

Statement  to  customer 54 

Statement  of  the  business  58-59 

Stock  certificate   119 

Stock  ledger  106-107 

Subscription    106 

Surplus  107 

Teams  account 20 

Telegrams    125 

Time  drafts  66 

Titles 8 

Transfer  of  real  property   79 

Transfer  of  stock 110 

Treasury  stock 106 

Trial  balance   19 

Undivided  profits 107 

Unsubscribed  stock   106 

Vouchers    41 

Warranty  deeds 149 


RETURN     CIRCULATION  DEPARTMENT 
T0«— #*      202  Main  Library 

LOAN  PERIOD  1 
HOME  USE 

2 

3 

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ALL  BOOKS  MAY  BE  RECALLED  AFTER  7  DAYS 

Renewals  and  Recharges  may  be  made  4  days  prior  to  the  due  date. 

Books  may  be  Renewed  by  calling     642-3405. 

DUE  AS  STAMPED  BELOW 

MAR  0  -  ]993 

M.'mDl^rClRC   tt 

3  02'93 

ivui^  *^ 

)RAA  NO.  DD6 

UNIVbKbllYUI-LA 
BERKELEY 

LII-ORNIA,  BbKKbLtY 
CA  94720 

>D   i 1429 

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